Web services rely on the transfer of XML data. This poses a threat from the point of view that every packet possible could be malicious. Hackers may send SOAP (Simple Object Access Protocol) packets containing executable messages, crafted windows/SQL executables within XML packets or even initiate a XDoS (XML DoS attack).

As the name suggested XML Firewalls help you protect your web services from such attacks and are designed to solely listen on port 80 and mitigate malicious XML based "traffic" using Layer 7 inspection.
The main advantage of using XML Firewalls is that as they are solely designed for XML handling the performance impact is much smaller then that of "other" XML Layer 7 solutions (such as Inline IPS, Layer 7 Firewalls or AV Proxies etc). Though on the flip side the main disadvantage being the setup costs involved in introducing a hardware based XML appliance within your organisation.

Additional Resources :

• http://www.infoq.com/articles/service-firewall
• http://www.infoworld.com/d/security-central/closing-xml-security-gap-522