The layout template is usually the source code of the main index.html file for your WebHelp. It defines the traditional frameset (Classic layout options for legacy WebHelp) or modern iFrames (Integrated option) into which the topic and navigation pages are loaded. Basically it only provides the external framework and tells the browser which files to load into which frames. This means that you should not normally have any reason to edit it.
If you choose the No Frames option this template is not used at all. Then, the table of contents page is used as the main index.html file.
This template is highly specialized and should only be edited if you have advanced HTML editing skills. It is essential for the proper functioning of the entire navigation system in WebHelp and editing errors you make here can easily make your help unusable.
Configuration > Publishing Options > WebHelp > Layout
Nowadays you will almost always choose an HTML skin to publish your project to WebHelp or HTML Help/CHM. A skin is a special kind of Help+Manual project without topics that only stores your HTML templates and all the settings relevant for HTML output to these two formats. When you choose a skin, the templates and settings in the skin completely replace those in your project.
Normally, a skin is pre-designed and you don't need to change anything. However, if you do want to change something, you must do all your editing in the .hmskin skin file. Editing in your Help+Manual project won't have any effect because those templates and settings are not used.
To edit a skin, make a copy of the .hmskin skin file in your project folder and then open it in Help+Manual by selecting .hmskin as the file type to open in the Open dialog. All the templates and settings are in the same places as in a normal Help+Manual project.
Exception: HTML Export Options
The HTML Export Options section is not stored in skins and needs to be edited in your project.