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Author is right in suspecting that he have not seen any good DSLs yet. Let me point them out, for starters: regular expressions, Yacc, LINQ.

And, no, not a single case where I use DSLs (and I use literally dozens of them, many per single project) would benefit from XML. Not a single one. Just imagine, say, Yacc in XML.

And DSLs are absolutely essential for programmers. There is no better way to deal with complex abstractions. Any complex abstraction can be represented as a language. And it is incredibly stupid to try to represent those complex abstractions in terms of some alien, unfit, "universal" model, like OOP or FP.