Basically XAMPP is just a program that is meant for web testing that is easy to install and use, unlike setting up everything including Apache by hand.
in a simple phrase it is everything. XAMP is the windows alternative to a LAMP Setup. Namely it is an Apache web server(http) mysql (databases) Php (server side scripts) package all bundled into one installer.
The only problem i have is the fact you've gotta leave you're computer on all the time. That causes mass eletricity bills. Therefore i would prefere to have a low energy server to have it on :P
XAMPP is a free and open source cross-platform web server package, consisting mainly of the Apache HTTP Server, MySQL database, and interpreters for scripts written in the PHP and Perl programming languages.
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