Template layers are used in Illustrator when tracing an image manually. We take you through the whole process in our Adobe Illustrator courses. 
Template layers are locked, semi-transparent layers used when tracing over a placed image with the Pen or Pencil tools. Create a new document, then go to File > Place > and navigate to where your image is saved – this can be a JPEG, TIFF, PSD, etc. In the Place dialog box tick the Template check box > OK.
This imports the image into a locked semi-transparent layer. Note that an additional layer, Layer 1, is also created on top. This is your drawing layer and acts like a sheet of tracing paper. If you need to resize or reposition the placed image, simply unlock the bottom layer and resize. Then re-lock the layer.
You can now use various drawing tools to trace round your image, for example the Pen or Pencil tool. Note that the drawing doesn’t have to be perfect first time – you can go back and use the Add Anchor Point tool to add details, or the Subtract Anchor Point tool to simplify a drawing. Or the Convert Anchor Point tool to change a sharp corner to a smooth point, and vice versa. You could also use the Direct Selection tool (white arrow) to manipulate anchor points or handles, or the Smooth tool to simplify curves.
When you’re happy with the result simply make the bottom layer invisible, or trash it if you’re confident you won’t need it later.
Whether you’re a complete beginner or self-taught, our courses will help you gain self-confidence in your Illustrator workflow, as well as adding to your professional skill-set. See many examples of our Illustrator clients’ work on our Facebook page.
Other related Illustrator Blog Posts:
Illustrator workspace
Illustrator basics
Illustrator clipping masks
Illustrator live trace
Illustrator brushes