A literal element or text is really an action to create a copy.

The xsl:apply-templates is an action that specifies where the processor should go next.

There are many other kinds of actions specified by elements in the XSLT namespace:

apply-templates, call-template, apply-imports, for-each, value-of, copy-of, number, choose, if, text, copy, variable, message, fallback, processing-instruction, comment, element, attribute.

XSLT is extensible so you can create your own actions and extend the processor.