You should have a look at the various nodes about XML::Parser on the site (use the site search), starting with XML::Parser Tutorial and the review.

Here is a somewhat clean (except that it uses global variables) way to use XML::Parser for your purpose:

#!/usr/bin/perl -w
use strict;

use XML::Parser;

my( $in_item, $item);

my $parser= XML::Parser->new();
$parser->setHandlers( Start => \&start_handler, 
                      Char  => \&char_handler,
                      End   => \&end_handler,
                    );
$parser->parse( \*DATA);

sub start_handler()        # raises a flag when getting to Item
{
  my ($p, $elmt ) = @_;
  if ( $elmt eq 'Item' )
  {  $in_item=1;
     $item='';             # reset the item text
  }
} 

sub char_handler           # stores the item text in $item
{ 
  my( $p, $text)= @_;
  if( $in_item) { $item .= $text; }
}

sub end_handler            # processes the item and lowers the flag
{
  my ($p, $elmt ) = @_;
  if ( $elmt eq 'Item' )
  {  $in_item=0;           # Toto, we are not in Item anymore
     # this is where you call the Item processing procedure
     print "item: $item\n";
  }
} 


__DATA__
<Orders>
  <Order ID="0008" Date="11/14/1999"><Item>A Book</Item></Order>
</Orders>
[download]

Now as for your second question, XML::Parser's Subs style would help, or you could just use XML::Twig:

#!/usr/bin/perl -w
use strict;

use XML::Twig;

my $twig= XML::Twig->new( twig_handlers => { Item => sub { print $_->t
+ext, "\n"; } });
$twig->parse( \*DATA);

__DATA__
<Orders>
  <Order ID="0008" Date="11/14/1999"><Item>A Book</Item></Order>
</Orders>
[download]

BTW, I was confused by the use of Entity in your question. Entity already has a meaning in XML: < is an entity.