What does "nillable" mean?

Nillability allows tags to exisit without content and have that lack of content be meaningful.

Without some prior agreement, the absence of an element does not have any particular meaning. Take PersonMiddleName as an example. The following snippet of XML does not mean that the person has no middle name. It only means that no middle name was included in the exchange.

<PersonName>
    <PersonGivenName>John</PersonGivenName>
    <PersonSurName>Smith</PersonSurName>
</PersonName>

To show that the person in question really has no middle name, the PersonMiddleName can be set to nil via the xsi namespace:

<PersonName>
    <PersonGivenName>John</PersonGivenName>
    <PersonMiddleName xsi:nil="true"></PersonMiddleName>
    <PersonSurName>Smith</PersonSurName>
</PersonName>

Nillability lets you show where the lack of data is meaningful. GJXDM and NIEM elements are nillable.