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A Template takes the data in a Story and translates it in to something more legible. This is usually HTML, but it could be anything; text, XML, PHP, JSP, PDF, or whatever else you need.
In Bricolage a template is associated with an OutputChannel. You can have more than one Output Channel. For each story, the Publish step checks to see if there is a Template that matches both the Story Type and the Output Channel. If so, the data is run through the Template and a file is created. If there are multiple matches they are all run.
In this way, you can generate all the files you need from a given Story without duplicating any data.
By default, templates come in three forms
There is tons of info in the API Docs (soon to be moved to this wiki)