More like XML but not just one document, many. One for styles, one for the document, one for the theme and so on.
Word documents are compressed and saved and I don't think there's a way to view the source from Word itself since it's made up of many XML docs. So, you have to first decompress the word file. To do so, change the .docx or .doc extension to .zip (hello.doc -> hello.doc.zip for example). Now, open the zip with Windows Explorer and there you go.
If you check out word/document.xml from the extracted stuff, you can see the contents of the document along with the XML markup. Here's a snippet from a document with just "hello, world!" inside it.
<w:p w:rsidR="00EA62CA" w:rsidRDefault="004F37CE">
<w:bookmarkStart w:id="0" w:name="_GoBack" />
<w:bookmarkEnd w:id="0" /></w:p>
<w:pgSz w:w="12240" w:h="15840" />
<w:pgMar w:top="1440" w:right="1440" w:bottom="1440" w:left="1440" w:header="720" w:footer="720" w:gutter="0" />
<w:cols w:space="720" />
<w:docGrid w:linePitch="360" /></w:sectPr>
Check out this article for a more detailed overview of the uncompressed files and directories.