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In this video tutorial for Vocabulary Worksheet Factory 5, the presenter demonstrates how to effectively use templates to create vocabulary documents. Templates allow for the quick creation of aesthetically pleasing worksheets while avoiding the risk of accidentally altering the original document when using the "Save As" function. By utilizing templates, users can ensure that the original remains unchanged, as templates open as new documents. The presenter has an existing document to illustrate the process and plans to develop something reusable for annual use. Overall, using templates simplifies vocabulary document creation while preserving the integrity of original files.