This is a format created in the Acorn Draw program, intended for image visualization by using vector lines. It’s used for storing information in the publishing business (brochures, logotypes, etc.). The main advantage is it’s high quality source images when printing. It’s been in use since 1980.
This format is used to store background images in uncompressed form in the X Windows System user interface for remote server maintenance. It stores a 'dump' or screenshot of the window or background of the client program. It may include different colors depending on the capabilities of the graphics card that is used to create the XWD file.