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To understand how title block integration works with sheet sets, it's important to grasp the functionality of the template. The sheet set properties contain integrated blocks like drawing title and call-out bubble. These blocks are stored in the template file, which is used to generate new sheets within the set. By storing these integrated elements in the project folder, they can be easily accessed for each new sheet created. Linked attributes in the title block can be seen in the template file, ensuring consistency across all sheets in the set.