Perhaps you mean entering the text directly into the Dialog xml instead of making it refer to a loc file? I'm not sure if that works, I'll go test if it allows you to enter text instead of a #string in the <message> and <answer> tags.

Edit:
Ah, yes it seems to work. I edited the XML and replaced the #string with plaintext (screenshot 1) and tried it in the game (screenshot 2). I guess this is what he meant by putting the text directly into the XML.

The xml file doesn't specify the name of the loc file it refers to, I guess the game simply recycles the name. I suppose if we put all the text into the xml, you still need the loc file but we can leave empty except for the header comments.

Edit:
Fixed the screenshot, was using an old one.

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