The Theme Locations box appears in the sidebar and lists every possible location within the theme that this template can be assigned to.
By selecting one or more of these theme locations, you are telling WordPress to replace the post's default content display in this location with this template.
Technical note: usually, a theme is programmed to display a post's title and content. Since this template will only replace the content display, the title will still display above the template, because it has been hard-coded into the theme. For this reason, templates you add to theme locations often won't need to start by showing a title, since it will already be displayed. If this is undesirable, you can modify the theme, or hide the title through other means (with CSS or JavaScript, for example).
Templates can be added to other non-theme-location places as well:
- When creating a Query, you will be asked which template to use to display each result in the query
- When adding connections to a template, you will be asked which template to use to display the connections