SV* item = *av_fetch( array, i, 0 );

I worry I'm simply being trolled, but: that looks absolutely like vanilla C to me. We're calling a function, passing it some arguments, getting back some sort of pointer-to-a-pointer, which we dereference and store in a new pointer variable. Clearly the function av_fetch() and the type SV will have been declared somewhere.

The only magic here is an implicit #include <perl.h>, which brings in perl's standard typedefs, function declarations, etc. XS is a whole 'nother language that is parsed by its own compiler (xsubpp) rather than by a C compiler.