SharePoint 2010 : Creating a Web/Site template

What Are Web Templates in general?
We can a web site template is a pre-designed web page or simply a web page without or with basic contents. Right?

What is web template in the SharePoint term?
Web templates on the other hand, are stored in the database, and are created using an existing site, with or without its specific content, as a model. This provides a means for reusing sites that you have customized.

In SharePoint 2007/2010 the meaning is same for both the version. But creating a web template is now different in the both version, means approach is different.
Like in MOSS we can create the web template using the existing site, SPD 2007 for UI and WSP for deployment. But in the SharePoint now you can create your Custom Web template using the SharePoint existing site. Well, for the custom template first you have to design and implement all the requirement on the existing site, and save the template in the Site templates. But here is the slightly change, we can create two types of the site template solution,
Farm
Sandbox
In VS 2010 their is a new template for the creating the solution from existing WSP is Import SharePoint Solution Package.

Now you can import your WSP in this solution and you can write your custom code or now you can modify UI etc. It will give great help when you are creating a sandbox solution and does not want to write a code. then just deploy all the solution on existing site and use that site WSP to import in this solution. Extract your required solution from it and implement in the your solution.