Basic namespace question

I have a basic question about XML Namespaces, as I just cannot seem to 
fully grasp the concept.

I know how to set up a namespace, and I know how they are used in the 
document and such; my question is mainly about the URI associated with a 
namespace. Let's use this as an example:

|<x xmlns:edi='http://ecommerce.org/schema'>
  <!-- the 'price' element's namespace is http://ecommerce.org/schema -->
  <edi:price units='Euro'>32.18</edi:price>
</x>||

Now I'm not too sure how to phrase this question, but here goes: do I 
have to associate a URI with a namespace? In the above example, what 
would be the case if there was no xmlns declaration and the ns "edi" was 
used? I suppose what I am asking is: what is the benefit of declaring an 
xmlns in the manner  xmlns:prefix='URI'? Is information from that URI 
being used in the XML document somehow? It's all very confusing to me.

Also, let's say I have a simple text document located somewhere on my 
hard drive, like C:\document.txt. If I wanted to define a namespace for 
that document, such as  xmlns:doc='that text document', how exactly 
would I do so? Is it even needed?

Thanks in advance,
Dan
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