X-height is basically the height of the lowercase letter «x» in any font. Working with x-height is one of a few ways to increase legibility and make the text easier to read.
As you can see in the image below, the larger x-height you make the more readable font appears. But this can work on both sides.
Although large x-height makes a type more visible even while using smaller font sizes, making x-height too large can reduce legibility within text blocks. This happens because the user’s eye cannot distinguish the difference between the lowercase letters and capitalised ones quickly and easily read through the text. Hence, using large x-height in paragraphs can mess up the perception and make it harder for us to recognise different letter shapes. On the other hand, smaller x-height can increase the space between lines and size of the ascenders and descenders, which will provide better understanding.