The original XSL project‌ yielded several technologies - XSLT for transforming XML into other XML, XSL:FO as an intermediate output format and XPath.
When you import XML into an InDesign document, you can specify an XSLT stylesheet. You would do that for several purposes: the imported XML may be closer to the original data including rich nested structures, some information may not be needed in print, be in wrong order or hiding in attributes. Besides sorting in XSLT is wicked fast.
Unfortunately XSLT is a very different world from most other programming languages, so you will get better support in dedicated outside forums or lists, even though a few of us here also know it (see above).
Another problem with XSLT is the age of the implementation provided by Adobe, don't expect features from EXSLT or from XSLT version 2 to work. In one of my plugin projects I just gave up on InDesign's XSLT and used libxslt instead. I can't tell for InDesign versions beyond CS6, though.
The biggest problem of XSLT within InDesign is that it only can output other XML, spiced up with few attributes as directives to trigger styles, but you can't create a new page or text frame, anchored page items and so forth. Looking back to XSL, that would be the domain of XSL:FO. There is completely no support for that in InDesign.
Instead, formatting is where scripting comes into the play. Back when InDesign had no XML support at all (around CS2) I wrote an experimental plugin with an approach similar to a StAX parser - basically feeding all the XML artifacts into matching methods, rather than loading them into the document structure. My first larger script to utilize that plugin was a partial XSL:FO processor that would map FO objects to InDesign objects, e.g. a fo:page-sequence would be turned into an InDesign section, and so forth. The problem with FO is that in most areas InDesign's possibilities are much richer so you would only want FO if you have an existing workflow with external processors, and need to improve the output quality by utilizing InDesign's better typography, image handling and so forth. When you start from scratch, you'd bypass the whole FO stuff and adopt the XML to your own complicated layout templates.
That project was never completed as I saw that major XML related efforts by Adobe were forthcoming with CS3, besides by then I had come to the above conclusion that typical users of FO have much simpler technical output needs better served by dedicated FO processors, comparing to the more elaborate use cases typical for InDesign. Besides I had to focus on a different project.
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