Elements are the basic building blocks of an XML model, which organizes them into a tree structure. Elements can contain other elements (via group particles) and attributes, and can reference groups, attribute groups and simple and complex types.
Global elements - have no parent element, and are directly linked to the <schema> root element. They can be reused in the model through referencing elements.
Local elements - have a parent element in a diagram, and are unique within their parent scope. They reference (and, thus, be defined by) a global element by selecting the global element in the Reference property on the General tab of their property sheet.
Parent elements are linked to their child elements through group particles (sequence, choice or all), which contain a group of child elements (see the Group type property in Element Properties).
You can derive an XSD element data type to extend or restrict its values (see the Derivation property in Element Properties).