When an element is declared globally then it can be referenced by any other element declaration.
Global and Local Simple-Type Elements

When an element is declared globally then it can be referenced by any other element declaration. Declare the element as a child of the xs:schema element then it is considered as global and now it can be reused many time by other elements.

For example: line1 and line2 elements are global and can be referenced by Address element.

<?xml version="1.0" encoding="UTF-8"?> <xs:schema xmlns:xs="http://www.w3.org/2001/XMLSchema">        <xs:element name="line1" type="xs:string"/>        <xs:element name="line2" type="xs:string"/>        <xs:element name="Address">             <xs:complexType>                  <xs:sequence>                       <xs:element ref="line1"/>                       <xs:element ref="line2"/>                  </xs:sequence>             </xs:complexType>        </xs:element> </xs:schema>

You can also define the type of an element locally. The local type is unnamed and that type is available to that element only.

<?xml version="1.0"?> <xs:schema xmlns:xs="http://www.w3.org/2001/XMLSchema">      <xs:element name="myelm1">           <xs:complexType>                <xs:sequence>                    <xs:element name="myelm2">                         <xs:simpleType>                            <xs:restriction base="xs:string">                                <xs:length value="10"/>                            </xs:restriction>                         </xs:simpleType>                    </xs:element>                </xs:sequence>           </xs:complexType>      </xs:element> </xs:schema>