The theory behind a basic template system is quite straightforward. A PHP developer, like yourself, creates a variety of flexible scripts to do various common jobs on your web site. These scripts, called templates, can be inserted by designers into HTML pages through the use of custom tags. During execution, these tags are replaced with the appropriate PHP scripts to form a complete page, and the effect is transparent to the end-user.
It is important to remember that templating systems are designed to make life easier for everyone. For the programmer, having a template system means they can set up the templates once and not really have to come back to them unless a serious change to the site design has been made. For the web designers (whom we will assume are non-programmers; think "Dreamweaver"), it means they have the ability to make use pre-written code without having to worry about whether it will work or not. That is, they can do that if you have done your part of the job properly!