The generic xs:untyped type applies to all element nodes that are "untyped", i.e., have no specific type annotation. This includes element nodes that were not validated against a schema declaration. "Types, Nodes, and Atomic Values" in Chapter 11 describes how element nodes might come to be untyped.
Important
In previous versions of XQuery (including the Candidate Recommendation), untyped was prefixed with xdt: instead of xs: because it was in a different namespace. Some processors still support the previous namespaces for these types instead.