An X-Out ball is essentially identical to a non-X-out golf ball of the same brand. But at some point in the production process, a small blemish of some sort occurs. It could be cosmetic, or perhaps the weighting or sizing is a tiny bit off. Rather than just tossing out these balls, some manufacturers stamp over the name brand and sell them as X-Outs.
Most recreational golfers will not be able to tell any difference in performance between X-Outs and their "regular" counterparts.
For more on X-Outs, see our FAQ entry, What are X-Outs, and are They Legal?