A parameter declared in a function or template but never referenced in its body is dead code and should be removed or used.
Incorrect:
<xsl:template name="greet">
<xsl:param name="name"/>
<p>Hello</p>
</xsl:template>
Correct:
<xsl:template name="greet">
<xsl:param name="name"/>
<p><xsl:value-of select="concat('Hello, ', $name)"/></p>
</xsl:template>