A Template defines the layout of a group of pages, possibly an entire web site. That is, it says where the different parts of a web page go. Basically controlling the look of the pages, keeping them consistant, but also making it easy to make changes to the entire group.
Here's an example of one typical Template:
This layout is simple but quite effective, easy for the visitor to your site to locate each part.
With a Template, it's not just how the pages are arranged when they're first created, but anytime the Template is changed. What does that mean? Say you join some business association, and want to place their logo on all your pages in the guidebar or other section of the Template. That can be done with a single update to the Template, and not have to update every page separately. And it keeps them all consistant. No finding old pages later where it was missed.