How PHPTemplate works and what it do?
PHPTemplate:


  A theme engine that allows you to use template files written in pure
  php. These template files do not need to be processed by the theme
  engine, and as such execute a lot faster than most other template
  engines. Another major advantage to using PHP as your template
  language, is flexibility, as the advanced user can access any
  information / functionality available in the Drupal API, and is not
  restricted to what the template engine / language allows him to do.
  
  This is the default theme engine starting in Drupal 4.7. If you are
  using Drupal 4.7 and above, you don't need to download PHPTemplate
  here.


A Template system does not need to use special code or markup to be called a template. PHPTemplate refers the system of implementing pure php code template files, how those files are accessed and referenced by the system and how other parts of the system (such as template.php) can modify the results of those files