From Sega Retro

The RXL (ROM Extension Library) Format of ROM patching, created by saxman, fixes issues that most people find with IPS patches. RXL programs were very specifically designed for software for ROMs. They work like plugins more than anything else, providing a way to share portions of a modified ROM without the need to reprogram the code.

For a long time, IPS patches have been used to distribute hacks. It becomes a bit more complicated when you have to use both an IPS and an expansion file. Software like StealthPatch can use expansion data inside an IPS patch, but many other IPS patchers don't support this. However, this is only a minor issue.

When programming software for ROMs (e.g. running extra instructions to make the game read/write extra information—useful for many things such as level editors), bigger problems come in play. Most software addons for ROMs are designed specifically to be patched at a precise place in the ROM. If it's not patched correctly, it doesn't work. This is especially bad when you're trying to patch a ROM that already has information at the needed address. RXL avoids this problem.

Like IPS patches, the RXL format has fallen out of use due to the adoption of disassembly editing, and high-speed internet connections which make people less concerned about file sizes.