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As I understand it is a UNIX thing that provides a visual user interface for some programs that use it.
As I remember, for example, Open Office for Mac OS X required the installation of X11.
 
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GIMP also uses X11.
 
It is the X Window System, the standard Unix GUI.

It is used by applications programmed against standard Unix GUI APIs, not Apple proprietary or portable ones mapping to Apple.
 
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