Question - Why not just carry on extending HTML?
Answer -
HTML was already overburdened with dozens of interesting but incompatible inventions from different manufacturers, because it provides only one way of describing your information.
XML allows groups of people or organizations to question C.13, create their own customized markup applications for exchanging information in their domain (music, chemistry, electronics, hill-walking, finance, surfing, petroleum geology, linguistics, cooking, knitting, stellar cartography, history, engineering, rabbit-keeping, question C.19, mathematics, genealogy, etc).
HTML is now well beyond the limit of its usefulness as a way of describing information, and while it will continue to play an important role for the content it currently represents, many new applications require a more robust and flexible infrastructure.