I am trying to submit a new application in the Windows Phone Store. We decided to develop a Windows Phone 8 Silverlight application to support both WP 8.0 and WP 8.1.
When I upload the XAP file, I get the error that only .appx files can be uploaded. What does this mean?
.appx files are generated if you develop Windows Store apps (Windows 8/8.1) and as far as i know also Universal Apps.
it seems like you develop for Windows Phone! 8/8.1. What you get after compiling is a .xap-file.
When you log in to your developer account (https://dev.windows.com/en-us/dashboard) you can decide or should be asked if you want to go to the "Windows Phone Store" or the "Windows Store" dashboard. in your case you would need to choose "Windows Phone Store"
In order to get a .xap file of your app, you got to run it in release mode within your VS. During the earlier version of WP you don't need to run the Windows App Certification Kit and it's just a matter of uploading the xap file. But as of now you have to do it for Windows Phone apps too which creates the appx package for your application.
You could see the way it's being done here for the 8.1 version. Have a look at this one thread too in order to find the difference in packaging your app to upload according to your version.
