As the usage/help information indicates, there are multiple XML Schema design patterns that can be employed when using inst2xsd to generate XML Schema files from source XML.

Specifically, it can be used as an easy way to create a starting point XML Schema Definition (XSD) for someone who is more comfortable with Java than with XML Schema.

IEEE 1685™, "Standard for IP-XACT, Standard Structure for Packaging, Integrating and Re-Using IP Within Tool-Flows," describes an XML Schema for meta-data documenting Intellectual Property (IP) used ...

The new addition to its PDF and XML tools will take advantage of Adobe's XML architecture for creating intelligent electronic documents.