The templates allow mobile web sites to be easily created that have a generic mobile look and feel. They can also be embedded in apps (read into a HTML control) but I wouldn’t recommend doing so as the look and feel won’t be much like a native app. The latest templates (v2) have been restructured for easier customisation.
In 2007 I mentioned that we were missing the phone feature APIs needed to create HTML apps. This is still true today. As I mentioned later in that article, I believe that even when (maybe I should now say ‘if’) they become available, the complexity/differences of the APIs will percolate up to HTML to make development as difficult as native.