What is the purpose of the templates_c directory?

the templates_c sub-directory to your XOOPS site's root is a repository for "compiled" templates.
Templates are written using Smarty syntax, which resembles normal HTML to a great extent - however, for those templates to be usable by the system, they must be compiled to PHP code.

When a template is invoked for the first time, it is compiled to PHP code and placed in the templates_c directory for faster access on next invocation.

See also FAQ about Clearing cache

This Q&A was found on XOOPS Web Application System : https://xoops.org/modules/smartfaq/faq.php?faqid=182