Not a whole lot. And not just XSD, there's nothing either SGML or XML do that can't be done, fifty times faster, with fewer keystrokes, on standard - i.e., commodity, open - tooling, in Asciidoc (as it's deployed) or "Markdown" (with extensions).
USAF hasn't yet gotten nailed with the DTD attacks the way the USN was[0]. And that was a complete musterfluck. First they pulled all the handheld maintenance devices, then they basically mandated that all the stuff getting stuffed into entities could instead get shoved into a black box XML element stuffed full of Base64 or reference to an external binary or - hell - whatever you want. That's the current solution: the //multimedia element.
You'd think USAAF and USAA[1] would have learned something from this . .
[0] That's changing as we speak; DIA has a bunch of hardass new IT policies rolling out. God be praised.
[1] Although the USAA spec has more flex in it when it comes to geometry and other extremely specific rendering behaviors. It's much easier to optimize because it's not insistent that a frickin PDF parts catalog have draftsman-perfect line art.
Here's what the entities (specifically, CGM, the 800 lb gorilla of external entity references) do that can't be done in XML+SVG: ISO/IEC CGM:1999 line types (your dashed lines are exactly right); ISO/IEC CGM:1999 nurbs (so that the curves are just right). I have a bunch of counterarguments to these things and more, but the easiest one is : how much is a perfect dashed line worth? Is it worth twenty two million dollars? Because that's what it cost the Navy. That's assuming the PLAAF/PLAN doesn't hop inside your maintenance network off the east coast of Taiwan. Then you can buy your dashes at the reasonable cost of a few hundred dead sailors.
They need to swap out //multimedia for a standardized, text-based format yesterday, though. Either that or release an ISO profile for SVG, which honestly would be, like, a week's worth of work at most . . if you wanted to see it done, of course. Oh ISO Technical Steering, you and your loveable scamps made up almost entirely of stoneage software industry reps.
Then enjoy your complimentary security vulnerabilities.
Jokes aside what is it used for that XML Schema or other XML technologies can't do better?