Using different formats tells Word what the layout shall look like. For example, you can decide that a heading shall have a specific format (Arial 16 p, exact spacing before and after) and then you don't have to make that adjustment again when you're writing. The format will be visible in the style pan window and you just highlight your text and choose "Heading 1" for example, then all the text with that format will get the same layout and size.
The formats in the templates are already set, in order to make it easier for you when writing your thesis. You highlight your text and choose the wanted format and it will automatically get the right layout.
