XPS files is a new way in which Microsoft Office 2007 and above store the documents in. XPS files are basically zip archives which contain the files that make up the document.
XPS files contain XML markups for each page the text, embedded images and so on.
XPS files can usually be opened by any software that can open zip files. Extracting the content may not actually show you the documents in a proper format.
Microsoft has a handy tool called XPS viewer which will allow you to open and view XPS file. You can also view the XPS files by opening them in Internet explorer.