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Mathematical notations present a tricky problem in terms of storing as file. What do you store about the equations? The content information or the presentation information?

Both these approaches have been explored and implemented earlier. In terms of presentaion, TeX - a typsetting system created by Donald Kunth, that allows one markup text as well as mathematical notations (may be complex), in terms of how they must be displayed. Also, there has been development in terms of storing mathematical content - OpenMath - where the context is maintained.

MathML, an applicaiton of XML, can store mathematical notations in terms of presentation and/or content.

Though MathML 1.0 was not released under W3C, MathML 2.0 became a W3C recommendation as of Feb 2001. W3C has chartered the MathML Working Group to come up with MathML 3 by 2008.

In terms of compatibility, it is rendered by Gecko browsers like Firefox and Camino. There are plugins available for Internet Explorer. Office products like Open Office, render MathML natively.

Then there are conversion softwares. These let one convert MathML documents into TeX or OpenMath formats. Why do we need conversion softwares? One would ask considering the fact that MathML is pretty efficient and exhaustive in its capabilities to markup math notations.

Softwares that can use TeX extensively have been there for ages. As long as we can easily convert between TeX (or OpenMath) and MathML, there is no need to develop full suite of softwares from scratch. That is the advantage of using XML as a standard.