The XML / HTML branch of Settings has the following options.
If this option is selected the text within matching XML and HTML elements will be highlighted using the color specified for "Tags" under the "Editor" tab in the Manage themes dialog. The editor will determine what files are XML/HTML files based on the extensions specified in the appropriate wordfiles.
If this option is selected a close tag will automatically be inserted into the file being edited when the open tag is completed.
If this option is selected, the close tag will be inserted on a separate line rather than the same line as the open tag. This option is subdued if the option above is not selected.