Site templates are used to allow the rapid creation of web sites and basic content in a SharePoint system. Any number of new sites can be generated based on a site template. (note: there is some duplicate tags for this topic I.E: see also: SiteTemplate)
SiteTemplate (STP) is a methods for providing prepackaged site and list content in Microsoft Windows SharePoint Services You can save an existing site or list as a custom template. Custom templates are a way of packaging up a set of changes to an existing site definition and making those available for new sites and lists. Every custom template is based on a site definition. Custom templates are stored in the database and made available through the central or site collection template galleries.