The goal is to give you a step by step tutorial, how to build your own content template for your website.
The content type defines what kind of content you can add and display. (Inputfields for the edit dialog)
This item will be used inside your template to provide a nice preview when the user is picking the view.
These demo entries will be displayed when someone selects the template.
To work on a template you must always first show it (so you will see what your changes do), then go into editing it in a separate browser window.
So after reloading the page, you must select your content-type and your template first.
Note that the edit window stays open. You can now switch back to the other window and refresh it for a preview. Since the code-editor stays open, you can always undo again if you want to.
Everything should look right now. Let's edit it to be sure everything works...