Parameter or Variable?

Question

I am currently writing my thesis and keep digging into javascript/jquery/ajax. As I am pretty new to that, I'd would be very thankful If somebody could answer me the following question:

I use the following ajax-call to receive the text-values of elements (here: step) from a xml ("a.xml") and use them in a variable ("F1") in Adobe Captive.

Could somebody tell me, if the "xml" in function(xml) is a variable or a parameter and why this needs to be inserted in the function brackets?

$.ajax({

url: "../a.xml", 
dataType: "xml",
success: function(xml) {

window.cpAPIInterface.setVariableValue("F1", $(xml).find("step[id='a1']")[0].textContent);