You are looking at the HTML representation of the XML format.
HTML is good for debugging, but is unsuitable for application use.
Specify the format parameter to change the output format.
To see the non HTML representation of the XML format, set format=xml.
See the complete documentation, or API help for more information. 
<?xml version="1.0"?>
<api>
  <query-continue>
    <allcategories accontinue="Cousin" />
  </query-continue>
  <query>
    <allcategories>
      <c size="15" pages="15" files="0" subcats="0" xml:space="preserve">Aristocrat</c>
      <c size="3" pages="3" files="0" subcats="0" xml:space="preserve">Barren Cliffs Guard</c>
      <c size="18" pages="18" files="0" subcats="0" xml:space="preserve">Barren Cliffs Prisoner</c>
      <c size="0" pages="0" files="0" subcats="0" xml:space="preserve">Barren Clifs Guard</c>
      <c size="7" pages="7" files="0" subcats="0" xml:space="preserve">Beast</c>
      <c size="1" pages="1" files="0" subcats="0" xml:space="preserve">Church of Blazing Glory Member</c>
      <c size="0" pages="0" files="0" subcats="0" xml:space="preserve">Church of Tempus Member</c>
      <c size="6" pages="6" files="0" subcats="0" xml:space="preserve">City</c>
      <c size="1" pages="1" files="0" subcats="0" xml:space="preserve">Companion of the Palid Mask</c>
      <c size="2" pages="2" files="0" subcats="0" xml:space="preserve">Construct</c>
    </allcategories>
  </query>
</api>