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The libxml extension is enabled by default, although it may be disabled with --disable-libxml.

The optional --with-libxml-dir directive is used to specify the location of libxml on the system that PHP is being compiled on, otherwise only the default locations are scanned. The configure process checks for libxml (specifically, xml2-config) in the following order:

1. The location ([DIR]) specified with --with-libxml-dir ([DIR]=/bin/xml2-config)

2. /usr/local/bin/xml2-config

3. /usr/bin/xml2-config

If configure cannot find xml2-config in the directory specified by --with-libxml-dir, then it'll continue on and check the default locations.