Notations are XML's way of handling unparsed (typically binary) data. XML parsers are simply not equipped to handle binary data formats in a generic, cross-platform manner. In lieu of this, notations are used to associate a name to an external handler application. For instance, the following notation could be used for GIF images files:

<!NOTATION GIF SYSTEM "gifviewer.exe">

assuming you have an application called gifviewer.exe that knows what to do with a GIF image. There really isn't much you can do with this. It simply provides a way for an XML document to say "Hey, I've got some non-XML data, and here is an application that can handle it."