The format is designed for Kodak cameras to store uncompressed RAW images in their original form without auto color and white balance correction. The file has a TIFF-structure that allows you to edit the color temperature and exposure of the finished image without losing information and quality, which is something that cannot be done with JPEG format images.
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.