Full code after the jump.

View MXML

<?xml version="1.0" encoding="utf-8"?>
<!-- http://blog.flexexamples.com/2008/11/05/setting-a-datagrid-controls-data-provider-to-an-xml-object-in-flex/ -->
<mx:Application name="DataGrid_dataProvider_XML_test2"
        xmlns:mx="http://www.adobe.com/2006/mxml"
        layout="vertical"
        verticalAlign="middle"
        backgroundColor="white">

    <mx:Script>
        <![CDATA[
            import mx.controls.dataGridClasses.DataGridColumn;
            import mx.utils.ObjectUtil;

            private function labelFunc(item:XML, col:DataGridColumn):String {
                return item.name();
            }

            private function nameSortCompareFunc(itemA:XML, itemB:XML):int {
                return ObjectUtil.stringCompare(dataGridCol1.itemToLabel(itemA), dataGridCol1.itemToLabel(itemB), true);
            }

            private function typeSortCompareFunc(itemA:XML, itemB:XML):int {
                return ObjectUtil.numericCompare(itemA.@type, itemB.@type);
            }
        ]]>
    </mx:Script>

    <mx:XML id="xmlDP" source="data/log.xml" />

    <mx:DataGrid id="dataGrid"
            dataProvider="{xmlDP.children()}"
            verticalScrollPolicy="on">
        <mx:columns>
            <mx:DataGridColumn id="dataGridCol1"
                    headerText="Name"
                    labelFunction="labelFunc"
                    sortCompareFunction="nameSortCompareFunc"
                    width="80"/>
            <mx:DataGridColumn id="dataGridCol2"
                    dataField="@type"
                    headerText="Type"
                    sortCompareFunction="typeSortCompareFunc"
                    width="50" />
            <mx:DataGridColumn id="dataGridCol3"
                    dataField="@message"
                    headerText="Message"
                    width="200" />
        </mx:columns>
    </mx:DataGrid>

</mx:Application>

data/log.xml

<?xml version="1.0" encoding="utf-8"?>
<!-- http://blog.flexexamples.com/2008/11/05/setting-a-datagrid-controls-data-provider-to-an-xml-object-in-flex/ -->
<log>
    <error type="13" message="Cannot do something or other." />
    <warning type="49" message="Whoa, that was close!" />
    <error type="134" message="Abort! Abort!" />
    <error type="99" message="Wait, do you smell smoke?" />
</log>

View source is enabled in the following example.

Due to popular demand, here is the “same” example in a more ActionScript friendly format:

View MXML

<?xml version="1.0" encoding="utf-8"?>
<!-- http://blog.flexexamples.com/2008/11/05/setting-a-datagrid-controls-data-provider-to-an-xml-object-in-flex/ -->
<mx:Application name="DataGrid_dataProvider_XML_test2"
        xmlns:mx="http://www.adobe.com/2006/mxml"
        layout="vertical"
        verticalAlign="middle"
        backgroundColor="white"
        initialize="init();">

    <mx:XML id="xmlDP" source="data/log.xml" />

    <mx:Script>
        <![CDATA[
            import mx.core.ScrollPolicy;
            import mx.controls.DataGrid;
            import mx.controls.dataGridClasses.DataGridColumn;
            import mx.utils.ObjectUtil;

            private var dataGrid:DataGrid;
            private var dataGridCol1:DataGridColumn;
            private var dataGridCol2:DataGridColumn;
            private var dataGridCol3:DataGridColumn;

            private function init():void {
                dataGridCol1 = new DataGridColumn();
                dataGridCol1.headerText = "Name";
                dataGridCol1.labelFunction = labelFunc;
                dataGridCol1.sortCompareFunction = nameSortCompareFunc;
                dataGridCol1.width = 80;

                dataGridCol2 = new DataGridColumn("@type");
                dataGridCol2.headerText = "Type";
                dataGridCol2.sortCompareFunction = typeSortCompareFunc;
                dataGridCol2.width = 50;

                dataGridCol3 = new DataGridColumn("@message");
                dataGridCol3.headerText = "Message";
                dataGridCol3.width = 200;

                dataGrid = new DataGrid();
                dataGrid.columns = [dataGridCol1, dataGridCol2, dataGridCol3];
                dataGrid.dataProvider = xmlDP.children();
                dataGrid.verticalScrollPolicy = ScrollPolicy.ON;
                addChild(dataGrid);
            }

            private function labelFunc(item:XML, col:DataGridColumn):String {
                return item.name();
            }

            private function nameSortCompareFunc(itemA:XML, itemB:XML):int {
                return ObjectUtil.stringCompare(dataGridCol1.itemToLabel(itemA), dataGridCol1.itemToLabel(itemB), true);
            }

            private function typeSortCompareFunc(itemA:XML, itemB:XML):int {
                return ObjectUtil.numericCompare(itemA.@type, itemB.@type);
            }
        ]]>
    </mx:Script>

</mx:Application>