XHTML was actually introduced to make HTML more of a structural language so as to leave the presentational aspects of design to other technologies. It aims to bring about a certain control and strictness of syntax to make HTML better able to handle future technological changes. In other words it is about preparing for the future.
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Is there any merits or demerits in both.
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Not for XHTML.
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I would say the biggest benefit of XHTML is that it "future-proofs" a website.
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In a nutshell. This answers your question about explaining the merits of XHTML.