On the RawSEO blog today Justin looks at templates in Smarty and how they can help you make more reusable sections of the page.
At its most basic function, the application code collects content, assigns it to the template engine and displays it. The content might be something like the headline, tagline, author and body of a newspaper article. The application code has no concern how this content will be presented in the template.
Smarty templates can not only be used to increase the overall speed of your php scripts through caching (more about caching can be found ere), but make it easier to develop large-scale applications through the separation of HTML code and php script.