A template document contains broadly two types of data: initial text and styles.
When you create a new document both data are transferred: styles go into the styles dictionary and text becomes the initial document content. After that you write additional content and eventually add new styles. You save the document. This document has all the usual properties of any document: you can edit it, print it, etc.
Then you arrive at step 3 above, update the styles and modifying initial text.
When you reopen a document based on the template, LO Writer notices that the template is not the same as it was when document was last updated. Writer asks you if you’d like to update the styles. You answer “no” or “yes” depending on your wish to keep the old layout.
Note that the question is about styles only. Modified text will not be copied to the document because it is considered initial content only.
With a “yes” answer, Writer will copy the styles from the template into the document. Styles with the same name will be updated to template state. Document styles without equivalent in the template are untouched and keep their document-definition.
If the “yes” answer was a mistake, don’t save the document and quit. Reopening the document will give you the opportunity to change your mind.
Concerning question 6 (version control), Writer is not very convenient for that, despite the File>Versions feature. It does not fit with my workflow (for instance, if I revert to an older version, I have never found the way to reenable a more recent version; also, the feature can’t manage a tree-like structure – think of Git if you’re familiar with this software management application).
In this situation, I save my templates in a dedicated directory (not the Writer templates directory) with revision in the name, like Template-1.ott, Template-2.ott, … The real active template is named Template.ott. To make one of the templates the active one, I copy Template-n.ott as Template.ott and then use File>Templates>Manage Templates to notify Writer it is to be considered the active one. (To avoid fake duplicates in this dialog, it is better to delete the template in the Writer templates directory first.)
When working with templates, a valuable extension is DocumentTemplateChanger.
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(2020-01-26 edit only removed typos)
