XML-RPC (Extensible Markup Language Remote Procedure Call) is a protocol that allows software running on different operating systems and in different environments to communicate with each other over the internet. It uses XML to encode the calls and HTTP as the transport mechanism.
The reason for disabling this within WordPress is to only allow users a single point of sign in and no back door access. WordPress being open source has a lot of bots constantly checking for main user account and trying to break in to steal data, credentials, content and more. Disabling this is one step closer to having better restrictions on your website.