  This paper discusses microphysical simulation of interactions in liquid
xenon, the active detector medium in many leading rare-event physics searches,
and describes experimental observables useful to understanding detector
performance. The scintillation and ionization yield distributions for signal
and background are presented using the Noble Element Simulation Technique, or
NEST, which is a toolkit based upon experimental data and simple, empirical
formulae. NEST models of light and of charge production as a function of
particle type, energy, and electric field are reviewed, as well as of energy
resolution and final pulse areas. After vetting of NEST against raw data, with
several specific examples pulled from XENON, ZEPLIN, LUX / LZ, and PandaX, we
interpolate and extrapolate its models to draw new conclusions on the
properties of future detectors (e.g., XLZD), in terms of the best possible
discrimination of electronic recoil backgrounds from the potential nuclear
recoil signal due to WIMP dark matter. We find that the oft-quoted value of a
99.5% discrimination is likely too conservative. NEST shows that another order
of magnitude improvement (99.95% discrimination) may be achievable with a high
photon detection efficiency (g1 about 15-20%) and reasonably achievable drift
field of approximately 300 V/cm.
