JSON stands for JavaScript Object Notation. It was created to hold structured data that could be used in JavaScript but became popular for sending data in web APIs. JSON supports basic data types like strings, numbers, Booleans, and null. XML stands for Extensible Markup Language and is used for structured data like HTML is for websites. Both JSON and XML allow hierarchical data and can be used for data interchange. Key differences include JSON being derived from JavaScript, having a smaller file size, and not containing tags like XML.