PCDATA - Parsed Character Data

XML parsers normally parse all the text in an XML document.

CDATA - (Unparsed) Character Data

The term CDATA is used about text data that should not be parsed by the XML parser.

Characters like "<" and "&" are illegal in XML elements.

From here (Google is your friend):

In a DTD, PCDATA and CDATA are used to assert something about the allowable content of elements and attributes, respectively. In an element's content model, #PCDATA says that the element contains (may contain) "any old text." (With exceptions as noted below.) In an attribute's declaration, CDATA is one sort of constraint you can put on the attribute's allowable values (other sorts, all mutually exclusive, include ID, IDREF, and NMTOKEN). An attribute whose allowable values are CDATA can (like PCDATA in an element) contain "any old text."

A potentially really confusing issue is that there's another "CDATA," also referred to as marked sections. A marked section is a portion of element (#PCDATA) content delimited with special strings: to close it. If you remember that PCDATA is "parsed character data," a CDATA section is literally the same thing, without the "parsed." Parsers transmit the content of a marked section to downstream applications without hiccupping every time they encounter special characters like < and &. This is useful when you're coding a document that contains lots of those special characters (like scripts and code fragments); it's easier on data entry, and easier on reading, than the corresponding entity reference.

So you can infer that the exception to the "any old text" rule is that PCDATA cannot include any of these unescaped special characters, UNLESS they fall within the scope of a CDATA marked section.

PCDATA

PCDATA: (Parsed Character Data): XML parsers are used to parse all the text in an XML document. PCDATA stands for Parsed Character data. PCDATA is the text that will be parsed by a parser. Tags inside the PCDATA will be treated as markup and entities will be expanded.

In other words you can say that a parsed character data means the XML parser examine the data and ensure that it doesn't content entity if it contains that will be replaced.

Let's take an example:

<?xml version="1.0"?>  
<!DOCTYPE employee SYSTEM "employee.dtd">  
<employee>  
  <firstname>vimal</firstname>  
  <lastname>jaiswal</lastname>  
  <email>vimal@javatpoint.com</email>  
</employee>   

In the above example, the employee element contains 3 more elements 'firstname', 'lastname', and 'email', so it parses further to get the data/text of firstname, lastname and email to give the value of employee as:

vimal jaiswal vimal@javatpoint.com

CDATA

CDATA: (Unparsed Character data): CDATA contains the text which is not parsed further in an XML document. Tags inside the CDATA text are not treated as markup and entities will not be expanded.

Let's take an example for CDATA:

<?xml version="1.0"?>  
<!DOCTYPE employee SYSTEM "employee.dtd">  
<employee>  
<![CDATA[  
  <firstname>vimal</firstname> 
  <lastname>jaiswal</lastname> 
  <email>vimal@javatpoint.com</email> 
]]>   
</employee>   

In the above CDATA example, CDATA is used just after the element employee to make the data/text unparsed, so it will give the value of employee:

<firstname>vimal</firstname><lastname>jaiswal</lastname><email>vimal@javatpoint.com</email>