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In this video tutorial on Vocabulary Worksheet Factory 5, the presenter demonstrates how to utilize templates for creating vocabulary documents. Templates are beneficial as they allow for quick generation of polished worksheets without altering the original template. Unlike merely saving a document, where changes might unintentionally overwrite the original, templates ensure that the original remains unchanged when opened as a new document. The tutorial highlights the importance of templates in streamlining the creation process while maintaining the integrity of the initial design. The presenter starts with a pre-existing document to illustrate how to create a reusable template for annual use.