Errors are the specification of size with no units in FO in three places (margin, content-width and content-height). Also the SVG as stated in the comment above has a height of 100 which exceeds half of the green circle.
Correcting these and showing just the FO:
<fo:root xmlns:fo="http://www.w3.org/1999/XSL/Format">
<fo:layout-master-set>
<fo:simple-page-master master-name="A4-portrait">
<fo:region-body/>
</fo:simple-page-master>
</fo:layout-master-set>
<fo:page-sequence master-reference="A4-portrait">
<fo:flow flow-name="xsl-region-body">
<fo:block>
<fo:instream-foreign-object xmlns:svg="http://www.w3.org/2000/svg">
<svg xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink" version="1.1" width="600" height="200">
<circle cx="50" cy="50" r="40" stroke="black" stroke-width="2" fill="red" />
<circle cx="100" cy="100" r="40" stroke="black" stroke-width="2" fill="green" />
</svg>
</fo:instream-foreign-object>
</fo:block>
</fo:flow>
</fo:page-sequence>
</fo:root>
This shows the complete SVG image in your output.