Can you please explain to me why does xoring the bits work?

First of all it is using logic gates. In this case, we are using the bitwise or.
So:
0 ^ 0 = 0
0 ^ 1 = 1
1 ^ 0 = 1
1 ^ 1 = 0

and for example if our array of numbers is [5, 3, 2, 5, 2].
Now if we iterate through this array we can see that if we bitwise all the numbers we get the number that isnt repeated as the same number will cancel out each other and equal 0
5 ^ 5 -> 1 0 1 ^ 1 0 1 = 0 0 0

If they are the same value, they equal 0 and if they are different values they equal 1. despite weather or not the two values are 1's or 0's.

Now when we iterate through the array
1 0 1 ^ 0 1 1 = 1 1 0
1 1 0 ^ 0 1 0 = 1 0 0
1 0 0 ^ 1 0 1 = 0 0 1
0 0 1 ^ 0 1 0 = 0 1 1 which is equal to 3.

https://www.tutorialspoint.com/cprogramming/c_strings.htm

https://www.geeksforgeeks.org/strings-in-c-2/

https://www.w3schools.in/c-tutorial/strings/

I'm not a C guy, but as far as I understand, you allocate some space first, then return it, even if it's empty. I think your allocation calculation numbers aren't entirely correct.

if(len==0) return "";

This is where it crashes. That's not how you return a freeable pointer.