For small to medium-sized sites, a template engine that is not overly complex yet is flexible enough to be useful is crutial for smooth operation. The most basic concept of a template -- simply including a header at the top and a footer at the bottom -- works for a very, very small, and very static site. It doesn't scale particularly well. On the flip side, a complex, full-suite tool such as Smarty, is often overkill for a smaller site, and by compiling (as it were) the templates, Smarty-based websites can be somewhat tedious to modify if all you're doing is very small changes.
Templates attempts to take the middle ground as a flexible and powerful, and simple but not too simple template engine, supporting simple template variables and arbitrary PHP code, it can be used on small to medium-sized sites to separate content and display more efficiently.
This is the template system used on Big Foot Web Design's site, and this site as well (although currently).
It is written in PHP, and is known to work on version 5.0.11 and later.
This program is distributed under the de facto public domain license. That is, do with it what you want, but remember that it will be done to you. Have fun!