How to use model schema="foo.xsd"

Hi
I am trying to use an xsd file (in the same folder as my xforms/xhtml file) in the following way in my code.

xforms:model schema="foo.xsd" id="anId"

Now:
Am I referencing an external xsd file?
If so, how would I write an inline schema declaration. I read up a similar post here that had the gentleman trying to import a namespace. I did not quite follow that.

How would I reference an external schema and an internal schema?