The Inherits attribute accepts a text string, which must match the Id of the View to be 'inherited'.
When creating new View 'A' that is very similar to existing View 'B' - it is common to copy and paste the XML from View 'B' into View 'A'.
This is often the most appropriate thing to do. The two Views are independent and share no common code.
Sometimes it is helpful to have View 'A' inherit View 'B'. View 'A' can contain customizations that don't exist in View 'B' - but any updates to View 'B' will apply to View 'A' as well.
The following example defines a View called 'Children' which inherits the 'People' View. A <Relationship> tag in Children creates a Parents field. Contact records defined by the Children View can be linked to other People records when those records represent their parents. If in the future a new Custom field 'Date of Birth' is added to the People View - that change is inherited to the Children View.
<View Id="Children" TableId="Contacts" Name="Children" Plural="Children" Singular="Child" Inherits="People">
<Category Id="Type" Default="Children" Invisible="true" />
<Relationship Id="Parents" Name="Parents" TableId="Contacts" ViewId="People" ShowAsTable="true"/>
<Eq FieldId="Type.Label" Value="Children" />