Using XML is one of XMPP its biggest strengths. XML is well designed, good documented and has a rich set of supporting libraries. XML documents can be composed of other XML documents in a sound fashion, which is a major feature for an extensible protocol as XMPP is, and XML documents compress well, making them suitable in low-bandwidth conditions (see [XEP-0365](https://xmpp.org/extensions/xep-0365.html)). I also never experienced a considerable battery drain when autark devices are using XMPP compared to a binary protocol.
I've worked with XMPP for years, and while I'm not going to give XML a glowing review, I do think most alternatives would have been worse for XMPP's use-case (extensible interoperable messaging). I also think XMPP is one of a small handful of examples of XML at its best (most of the time when I see XML used extensively in other projects, it's usually a horrific experience).
It's worth noting that XMPP uses a subset of XML (so no DTDs, comments, processing instructions, is restricted to UTF-8 only, for some examples).
Framing has been mentioned elsewhere, and it's worth noting that XMPP-over-websocket is defined, well-supported and widely deployed. The websocket layer adds framing.
Which modern serialized protocol do you envision here? That comes with good extensibility by design?
Just the fact that XML is old, doesn't mean it's bad. It might be a bit unnecessary verbose or hard to parse for constrained devices, but luckily there is EXI to solve these issues when efficiency is key.
