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The latter part of the description "Returns the result of atomizing a sequence, that is, replacing all nodes in the sequence by their typed values." of fn:data doesn't really take account of arrays.
The WG discussed this in the teleconference on 2014-10-14 and agreed to make an editorial change.
I have changed the summary to "Returns the result of atomizing a sequence. This process flattens arrays, and replaces nodes by their typed values."
Thanks.