Templater: Replace templates in the active file: what does this command do?

I have installed the Templater plugin and thoroughly read all the official Templater docs.

Unfortunately, it is not documented what the Templater commands (“Open Insert Template modal”, “Create new note from template”, and “Replace templates in the active file”) do. While for “Create new note from template” it’s pretty obvious, and with some experiments I found out that “Open Insert Template modal” just triggers the execution of the chosen template, the command “Replace templates in the active file” seems to do nothing - not even the selection of templates appears.

So, what does the Templater command “Replace templates in the active file” do?
Or how does it need to be configured to do anything?

It allows for you to type template code directly into the active file, and then run the command to replace them as if this was an inserted template.

This allows, amongst other things, to test templater code within the current file.

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