1. the XDM has a better quality match grade barrel (more accurate)
2. you can change the back strap on the grip for variation in grip size
3. has better recoil system (heavy duty guide rod spring)
4. has striker status indicator (to verify weapon is cocked)- may have this on origional XD, but not certain
5. has a MRT (minimal reset trigger) similar to sig's SRT (short reset trigger)- this is a great improvement for follow up shots.
6. deeper, longer slide grasp serrations for grip
7. more texture on polymer frame for better grip and control.
8. 16 rd. mag vs. 12 rds in the origional service model XD .40