WDDM and XDDM refer to display models for Windows operating systems. Each is an acronym to define a particular type of display model for specific versions of the operating system. To understand the differences, you must know more about display models and how they relate to Windows.
When Microsoft releases a new version of the Windows operating system, there are new features and enhancements. Manufacturers are creating new versions of their hardware and software at the same time Microsoft is making changes to Windows. The part of the new operating system you don't see is in the driver architecture. Windows must keep up with the advancements in fields like graphics. This requires them to rebuild the driver system to accommodate the enhancements of hardware products that will be in the newest computers. The advanced features of the new version of Windows also requires different drivers and better hardware. This is where WDDM and XDDM become crucial.
A driver is a piece of software that works with the operating system to run devices. Technically, the driver is a computer program that works as an intermediary between the operating system and the device. When Microsoft creates a new operating system, there may be design changes that require enhanced hardware and a different device driver. Simply put, a driver for Windows XP may not work in Vista or Windows 7. The display model is the device driver for the graphic hardware as it relates to the current version of the operating system. The labels WDDM and XDDM define the display model for different versions of Windows.
One of the differences between the XDDM and WDDM has to do with the processing of DirectX, which is a collection of application programming interfaces that handle multimedia. Applications such as Direct3D and DirectDraw are part of the DirectX platform. DirectX relates to many forms of media but is often associated with games. As graphics become more complex, other industries adapt to handle the enhancements. When the base graphics applications and hardware change, the drivers must accommodate the changes. The handling of DirectX is just one difference between these two models.
XDDM is the Windows 2000 Display Driver Model. It predates the Vista operating system. An XDDM display model may or may not be able to handle the enhanced graphics -- specifically the video memory requirements -- of the Vista operating system. Microsoft made changes in the display graphic model with the creation of Vista. To handle the changes, they made the Windows Display Driver Model, or WDDM. This display model requires the graphics hardware on the computer to have a different and more advanced structure to support the enhancements of Vista, including the Desktop Display Manager. There are even differerent versions of WDDM. For example, Vista uses WDDM 1.0, WIndows 7 uses WDDM 1.1 and WIndows 8 uses WDDM 1.2.