Layouts are placed in the system Layout node. Layouts are comprised of Masters and Templates.
Masters
A single master page should contain common elements used throughout a layout design. By having a centralized location for elements like html snippets, script and style definitions and references, updating a widely used layout becomes a matter of making updates in one location. A content item cannot directly use a Master page. Instead, content items directly reference a Template.
Templates
Just like Masters, Templates allow for grouping of commonly used style and layout elements but provide a greater level of variance. Templates may in turn reference Masters.
Content Placeholders
When a Template is configured to use a Master, you can specify segments or Placeholders inside the Master that replaceable content will appear. Placeholders are defined in Template layouts.
A template that references a Master then specifies Content regions in which Template specific content will be used to replace Placeholders.
Once a Template is created with or without using a Master, CMS edit fields can be added to allow for the creation and editing of Page items. Since all content-centric features are powered by the use of modules, the Connected Apps CMS platform provides a core Page module that directly references layouts to allow for the dynamic creation and updating of web pages.
NOTE: All markup inside Masters and Templates must be valid XHTML.
Additional Resources