XSL is a Turing-complete
functional programming language, not a declarative language. When you xsl:apply-template, you're calling a function.
Functional programming languages can often feel declarative. When XSL is doing trivial, functional transformations, when you keep your hands off of xsl:for-each, XSL feels declarative, and doesn't feel that bad.
The problem is: no clean API is perfectly shaped for UI, so you always wind up having to do arbitrary, non-trivial transformations with tricky uses of for-each to make the output HTML satisfy user requirements.
XSL's "escape hatch" is to allow arbitrary Turing-complete transformations, with <xsl:variable>, <xsl:for-each>, and <xsl:if>. This makes easy transformations easy and hard transformations possible.
XSL's escape hatch is always needed, but it's absolutely terrible, especially compared to JS, especially compared to modern frameworks. This is why JS remained popular, but XSL dwindled.
> It gives a low-effort but fairly high power (especially considering its neglect) on-ramp to templated web pages with no build steps or special server software (e.g. PHP, Ruby) that you need to maintain. It's an extremely natural fit if you want to add new custom HTML elements.
JavaScript is a much better low-effort high-power on-ramp to templated web pages with no build steps or server software. JavaScript is the natural fit for adding custom HTML elements (web components).
Seriously, XSLT is worse than JavaScript in every way, even at the stuff that XSLT is best at. Performance/bloat? Worse. Security? MUCH worse. Learnability / language design? Unimaginably worse.
EDIT: You edited your post, but the Custom Element API is for interactive client-side components. If you just want to transform some HTML on the page into other HTML as the page loads, you can use querySelectorAll, the jQuery way.