There are certain tasks and varieties that are always paid the same. Pay templates allow you to specify rules for common job configurations.
For instance, if you have a specific task or variety that must be paid a minimum-wage during and hourly or piecework job, you can create a template for that.
Ranch, Variety, Task, Piece Type, and Pay Type are all pay filters. These determine which jobs are affected. A simple configuration might be to apply a default piece price to all "piecework" Jobs. Selecting Pay Type to "piecework", while keeping the others as "Any", will achieve this.
Depending on which "Pay Type" you've selected, the pay rules will change. If you'd selected an "Hourly" pay type, you'll be able to set the default 'Hourly Rate'. If you've selected "Piecework", the last three fields (Default, Min, Max Piece Price) are the rules that get applied to piecework jobs.
So, using the above example, you could set a default piece price of $5 for all Piecework Jobs, with a minimum price of $4 and a maximum price of $10. When a piecework job is created, the default piece price will be set to $5. The user creating the job may change the price, but won't be allowed to change it below $4 or over $10.