I took some time to dive into how extensive JavaScript has made the word template in their world. I confess it reads a bit excessive to me. More than a bit, really. Tagged templates, in particular, look like one of the biggest foot guns I've ever seen.
I took it to design because I don't know of any other real reason to template the DOM other than for design purposes. Indeed, reading on the linked proposal, this is to make reactive things on a page. And that will have to be married to a design at some point. Often the entire point of introducing names that are exported from data to a rendered document is for the presentation implications of it. Otherwise, you'd just output the data?
Tagged template literals, aka "template string literals" are yet another technology adjacent to JS and HTML using the word "template". But it doesn't have much to do with the submission.
It's just a fancy name for advanced string interpolation in JS, and has no inherent connection to DOM elements or fragments.
But it is used by some technologies such as styled-components and Lit (the web component library).
styled-components is probably also where the obfuscated CSS-in-JS class names in the bluesky markup originate.
There is also a `<template>` element that is used by ShadowDOM and web components.
But nothing of that is the essence of the post, these are just things that coincidentally use the word "template" (and, less coincidentally, the concept).
As far as I see, it is about the wish to standardize declarative data-binding to DOM trees.
Basically, a React-like API built into the browser, but less detached from native rendering algorithms.
The idea of the post seems to be encapsulated in the web components issue and discussion. Agreed that it looks largely about data binding to DOM trees. To paraphrase you, "seems like advanced DOM interpolation in JS." Which, I just can't bring myself to agree that this looks good. Happy to be proven wrong in time.