Instead of starting with an empty workspace, using a template means you'll have some content, structure and permissions set up straight away. This is useful if you need a set of workspaces that will work in the same way. For example, a set of regional groups that all need the same structure. This will save time in setting up each workspace.
There are a set of standard Kahootz templates on the New Workspace page.
Templates can contain a structure (i.e. folders), content, permissions on items and workspace settings, and customisation on workspace home and dashboard; but they don't need to be permanent. You can change your workspace after it's been created from a template, as templates are a useful starting point.
If you have a workspace you'd like to turn into a template for your site then contact support.