In a content library you can store VM and vApp templates. You can use the VM and vApp templates to deploy virtual machines and vApps in the vSphere inventory.
A VM template is a template of a virtual machine. The VM templates that exist in a VM template folder differentiate from the VM templates that exist in a content library. A VM template that resides in a content library is in OVF format and if you export it to your local system it is saved as an .ovf file. The VM templates that exist in a VM template folder are not in OVF format but if you clone them to content library, the resulting template is in an OVF format.
A vApp template is a template of a vApp, which can contain multiple virtual machines or multiple vApps. A vApp template that resides in a content library is in OVF format, and if you export the template to your local system it is saved as an .ovf file. vApp templates are inventory objects that exist only in content libraries.
You can use VM templates and vApp templates to deploy virtual machines and vApps to a destination object such as a host or a cluster.