A reference to an entity that is substituted for the reference when the XML document is parsed. It can reference a predefined entity such as < or reference one that is defined in the DTD. In the XML data, the reference could be to an entity that is defined in the local subset of the DTD or to an external XML file (an external entity). The DTD can also carve out a segment of DTD specifications and give it a name so that it can be reused (included) at multiple points in the DTD by defining a parameter entity.