That sums it about up. You can consider the XSLT as the CSS for XML files.
Be aware that there are some more differences with regards to XHTML and HTML, but not earth-shaking. The extension is not important, it is the first line in the document that tells the renderers (e.g. browsers) how to interpret the document.
An ePUB file must be XHTML. I would advise that if you don't need javascript/audio/video and stuff like that, to create an ePUB2 instead of ePUB3.
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