Whidbey HTML Editor continues to use XML schemas to describe target browsers, page directives as well as user and custom controls. However, it is now able to pick up user and custom controls listed in register directives and automatically generates XML schemas for intellisense and validation. Hence you don’t have to create schemas manually anymore (process is well described in http://www.oreilly.com/catalog/aspdotnetnut2/chapter/ch06.pdf).
Schema generation is performed asynchronously in a background thread using managed reflection. You can peek into generated schemas in C:\Documents and Settings\your_username\Application Data\Microsoft\Visual Studio\8.0\Reflected Schemas. There you’ll find a catalog file (XML) and a bunch of randomly named XSD files (hint: you are not supposed to modify themJ). Note that if you recompile a control or simply replace control assembly with another version, VS will sense that and will regenerate the schema. It will also refresh ASP.NET control schemas if you install new version of the framework. Otherwise generated schemas stay cached so startup performance is not affected.