Several things are going on here:
UPnP is a set of networking protocols that manage communication among devices.
DLNA is a set of standards that uses UPnP for communication, but also covers encoding and generally managing media over networks.
XBMC can use DLNA - that means your TV, if it also 'speaks' DLNA can talk to your XBMC (or any other DLNA-compatible) server and for example stream videos over the network. DLNA basically allows them to communicate things like playlists, media folders, and finally media itself.
Be careful to rely on it too much though, it sounds very easy but in practice a lot of issues arise - To become 'DLNA-Certified', manufacturers must only fulfill very low standards, and thus many devices - especially TVs in my experience - do not understand many codecs. For Home Video Devices, only MPEG2 is required. If you need more, you basically have to find a device that explicitly understands that codec, or transcode the data on the server. Furthermore, consider bandwidth; 1080p is not going to happen over WLAN.