Question: When I chose New from the Template panel in the Post settings I saw a Create a custom template dialog. What’s a Custom template and what does it contain as default?
Answer: A custom template is one that overrides the default template for the selected post, page or query.
The Create a custom template dialog creates a new template in the database.
WordPress supports a variety of Custom templates. Some of them were originally created to be unique to a particular page, others could be assigned depending on the post type. Full Site Editing allows you to choose the template to be assigned to a particular post. How you use/misuse this freedom is up to you.
Page template hierarchy
| Template name format | Example | Usage |
|---|---|---|
| $custom | featured-image-left | Displays the featured image to the left |
| page-$slug | page-template-hierarchy | Template specifically for the template-hierarchy page |
| page-$id | page-2 | Template specifically for page ID 2 |
| page | Sitemap | Default for the Page post type |
| singular | n/a | Fallback for pages |
| index | Fallback for everything |
References
See Template hierarchy for the full hierarchy.
Additional note from Ann McCarthy
If you switch themes, these custom templates are lost and it would be good to highlight that: https://github.com/WordPress/gutenberg/issues/31954
