The Templates submenu of the File menu works just like the Favorites submenu, with one small but important difference. When you select a file from the Favorites menu, EditPad simply opens that file. If you select a file from the Templates menu, however, EditPad will create a new, untitled file with the content of the file you selected.
If you often edit a particular file, saving the changes back into the same file, you should add it to the Favorites. If you often create new files based on the contents of a particular file, you should add that file to the Templates menu. Using templates, you won’t accidentally save the changes over the original file.
The Favorites and Templates menus are completely independent. You can add the same file to both.