In this method, we take two cardioid microphones and place the capsules at a 90 degree angle to each other. In this technique, the microphone on the left is actually wired to the right channel, and vice versa, because of where they're pointing. This technique is considered by many to be the perfect way to get started in recording stereo.
With this technique, you'll get get a recording that's very focused, with a tight low-end response. You'll lose a little depth, but that's made up for in the lack of ambient information. This technique is best used if you're in a difficult-sounding room, and need to "zoom in" on the sound as best as possible.
When used with figure-8 (bidirectional) microphones, XY is called the Blumlein Technique.