When you select the button (by default with double clicking the left mouse button, or holding down the Control key and pressing the left mouse button), xlogout exits, and your X server exits.
Be sure you do not put xlogout into the background, or it will not do anything useful.
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Copyright 1998 Miles O'Neal, Austin, TX. All rights reserved. Miles O'Neal <roadkills.r.us@XYZZY.gmail.com> [remove the "XYZZY." to make things work!] c/o RNN / 1705 Oak Forest Dr / Round Rock, TX / 78681-1514