Solutions

XSLT 1.0: Based on the Muenchian method.

<xsl:for-each select="cities/city[not(@country = preceding::*/@country)]">
    <tr>
      <td><xsl:value-of select="@country"/></td>
      <td>
        <xsl:for-each select="../city[@country = current()/@country]">
          <xsl:value-of select="@name"/>
          <xsl:if test="position() != last()">, </xsl:if>
        </xsl:for-each>
      </td>
      <td><xsl:value-of select="sum(../city[@country = current()/@country]/@pop)"/></td>
    </tr>
</xsl:for-each>

XSLT 2.0:

<xsl:for-each-group select="cities/city" group-by="@country">
    <tr>
      <td><xsl:value-of select="@country"/></td>
      <td>
        <xsl:value-of select="current-group()/@name" separator=", "/>
      </td>
      <td><xsl:value-of select="sum(current-group()/@pop)"/></td>
    </tr>
</xsl:for-each-group>