echo "z1 z2" is producing a single-line string:
z1 z2
ls is producing two lines:
z1
z2
You can replicate its behavior with echo -e, which will print \n as newlines:
$ echo -e "z1\nz2" | xargs -I{} cat {}
abc
xyz
Why does `xargs` not work with `echo` but work with `ls`?
echo "z1 z2" is producing a single-line string:
z1 z2
ls is producing two lines:
z1
z2
You can replicate its behavior with echo -e, which will print \n as newlines:
$ echo -e "z1\nz2" | xargs -I{} cat {}
abc
xyz