The trick to doing this is not to open the file!
It's intended to be imported, as it is, into a blog. It's done automatically.
Go to your dashboard for the blog whose content you want to export, look down the left side til you see 'Tools'. From Tools, choose Export. Click on 'Export' (the free option). Next, choose 'All Content'. Next, click the 'Download Export File' and find somewhere on your computer for it to go (unless you've already got an area designated for downloads in which case it'll probably do it automatically).
Go to the dashboard for the blog you want to import the content into. Go to Tools and choose Import. Click on Import. From the list of Blogs to import to, choose the platform it's on (ie, if it's on WordPress choose WordPress, if it's on Blogger, choose Blogger) then just follow the instructions and wait til the blog imports all the content. Depending how much you've got, it might take quite a while. Usually you're sent an email when it completes, but if you've only got a small amount of content, sometimes it completes before you get the email. I find the best way to check on that is to go to 'All Posts' and see how many have arrived there in the new blog.
As an actual backup for just one blog, you don't have to do anything with the back up file unless you have the misfortune to lose your blog's contents, then you can just use import to put them back there.
I back up all my blogs from time to time, just in case, but I've not yet had need to use them as actual back ups, I use them instead to transfer some content from one to another blog.
I hope this helps.
For the support documentation about these, see:
and, in case it's applicable: