No, XSL-FO does not do formatting in the browser. It is meant to do printed page formatting. Currently the most common drivers produce PDF. But I heard, there is a LaTeX driver as well as PS.
Typical workflow is: XML -> XSL-T -> XSL-FO
Typical workflow is: XML -> XSL-T -> XSL-FO
Actually, that was XSL:FO.
XSLT is transformation, not formatting; of course you could translate to (X)HTML with embedded styles, or XSL:FO or something else that includes formatting, but XSLT doesn't do formatting itself.