The ENTITIES data type is derived from the ENTITY type. : ENTITIES « XML Schema « XML Tutorial

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2. XML Schema
3. ENTITIES

The value space is the set of finite-, nonzero-length sequences of entities. 
The lexical space is the white-space-separated list of entities. 
The value of ENTITIES must match the set of unparsed entity names declared in notation elements in the schema.

<!-- schema -->
<xsd:simpleType name="imageTypes">
  <xsd:restriction base="xsd:ENTITIES">
   <xsd:enumeration value="jpg"/>
   <xsd:enumeration value="gif"/>
   <xsd:enumeration value="png"/>
  </xsd:restriction>
</xsd:simpleType>
<!-- instance document -->

<gallery images="jpg gif png">Online_Brochure</gallery>