There's business value both to the individuals who tag and to search engines that archive web content. In fact, the value propositions feed into each other. For individuals, the more labels you put in your content to describe what it is about, the more findable it becomes. Most people put content on the web to be found. For search engines, the set of tagged links provide an indication of what the author intended by the post. Further, the aggregate of tags provided by many different people for a given link give an indication of that link's subject area. All of this information increases the value to searchers and therefore search engines because the additional information makes the intent of the content more apparent.

So, why use an xhtml microformat? There are two reasons. First, a microformat builds off of an already accepted format, so it is easier to get it in use. Html has been the single best accepted web format since the web's inception, so basing a microformat on xhtml is a natural. Second, it is much more convenient to fetch one file with all of the information than require several. Invariably, formats that use a standard other than xhtml require the addition of a separate file or non-standard attempts to shoehorn the information into an already existing html file. You either lose the value of standardization outlined in the first point or have to get a new standard accepted with a whole new file to fetch. It will take time to get software to produce the additional file, time to standardize where the file will be in relation to the html file, and time to develop tools that fetch the new file.

The value of folksonomy is that it increases the information value of content for all concerned. The value of xhtml microformats like xFolk is that they lower the costs and barriers to transmit the content better than competing approaches.