xmlHttpRequest.onerror handler use case

Since an XHR call is for a server response, onerror would come into play when there is an error at the server. Changing your client to be offline doesn't simulate a server error.

Suppose the server resource gets moved and the server responds with a 404 error? What if the server times out? What if the request itself is malformed and causes the server to throw an error?

Your question is the perfect example. Just try your code from your web developer console while on this very page.

Here, try it yourself:

var xmlhttp = new XMLHttpRequest(),
  method = 'GET',
  url = 'https://developer.mozilla.org/';

xmlhttp.open(method, url, true);
xmlhttp.onerror = function () {
  console.log("** An error occurred during the transaction");
};
xmlhttp.send();

When dealing with any network based IO all kinds of things could happen. Cross-Origin requests are only one. What if the server is offline, DNS lookup fails, a router between you and the server that is critical point of failure goes down?