A well formed xml is one that is structurally valid. There are many points that dictate the well formedness. Here is a checklist and this is an article on the same.
A valid xml is one that is well formed and additionally also follow a schema/dtd associated with the xml instance. An xml instance is valid against a schema/dtd, i.e. if you say "this xml instance is valid", it will not be a complete statement. You must say that "this xml instance is valid for this schema/dtd"