From our point of view, 
Jabber is the project that defines the low-level communication protocols which let the Volity system work. To the rest of the world, it's an open instant messaging platform. Because of its open and very well-documented nature, projects like Volity are able to use it as a vehicle, letting it take care of all the dirty work. 
Volity lets the Jabber protocol, and the existing network of servers that support it, take care of the following tasks:
-  Core network protocol (XMPP), including all instant-messenger functionality
 -  User management
 -  User authentication
 -  Table management, via Jabber's multi-user chat protocol
 -  Roster management
 
However, most of the Volity protocol per se is defined as Jabber-RPC calls, which (though they again use Jabber protocols as a transport) define a little idea-space of their own, apart from Jabber.
See Also
Concepts: Jabber Entity, JabberID, Jabber Data Form
JEPs that Volity uses
The Zen of Jabber
External Links