Templates used to be XML-based definitions, called Site Definitions. These would reside on the SharePoint servers in an on-premises deployment, but one couldn't directly modify these. The reason was that all SharePoint default files, that reside in the so-called SharePoint Hive (or SharePoint Root) on the file system, might be updated in any upcoming service pack, cumulative update, hotfix, or public update. Thus, if you edited even one XML file just slightly, you would run into unforeseen provisioning troubles, or even render yourself in a state that your SharePoint deployment would be unsupported.
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