A template can be considered as a golden image. It was a virtual machine (guest) once and then converted (flagged) as an template.
You can make a template a guest again and vice versa. When it is flagged as a template you can create customizabe clones of it. Customizable means that (in case of Windows) it is possible to run the sysprep utility automatically after the data has been copied to a new guest. Thereby it looses its identity and several settings. These settings can be added again manualy or by using a configuartion template.
When that is finished you have a new guest with its own new SID, name, etc. based on the data and status of the template.
AWo
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