There are two different types of template that are supported.
Page Templates
Site Templates
Page templates are as can be expected for individual pages. You can use these to create standard page styles/ layouts to quickly create large numbers of pages which share the same basic features. When working on a site you can set a template which will be used by default for all new pages created for that project.
Site Templates describe a layout of an entire sites directory structure and files. You can use this feature to have a standard directory layout for sites and hence quickly build a basic site with a few clicks. A very nice feature of site templates is that they can include page templates as well, so not only do you get the directory heirarchy but you also get the basic page layouts as well.
The site template feature needs a lot of work, especially on the interface used to create them.