Xdg itself was an acronym of the X Desktop Group, which is now known as
freedesktop.org, which developed a set of standards that are common across different desktop environments such as GNOME, KDE, LXDE and others.
These standards are important as it means
xdg-open can be used on any standards compliant Desktop Environment to open a file with the default application. One just needs, for example, to enter:
Whichever desktop environment is running, the native opening program, such as
gnome-open, will be invoked.
For more information, see the official site.