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This is how I see it:
blocks are the elements on your site. On xoops.org you can see a lot of blocks. For example on your left side you see the blocks "General Information", "XOOPS Wiki" an "Miscellaneous". These are elements on your site that contain some content. Blocks can be placed in the left, right or center column.
Templates are little html files that contain information about how a block is displayed. Each block has his own template. That means you can change the way a block looks in the template of the block. Let's say we want to add an little arrow image in front of every item in teh XOOPS wiki block. For that you should modify the template of the XOOPS WIKI block and add the html code for that arrow image before all these items.
Modules also use templates. These templates contain information about how the module itself (or parts of the module) will look. A module can have blocks, like the "top posters" on the left. This block belons to the newbb module.
It's difficult to explain. But it is a very logic design...