Templates are just a series of xml, php, html and image files that are stored in the templates directory of your site. You can edit these files or you can use the editing interface available in the Template Manager.
both You are given the choice of editing "html" and "css."
CSS stands for cascading style sheets. This controls many elements of the look and feel of your site. HTML is the file that controls where positions are defined and positioned. Other than that, it should be noted that, with a few exceptions, what is in the .css and what is in the HTML files largely depends on the approach of the tempate designer.
One common change is to use your own graphic/image. Graphics are linked to in the HTML file. Simply change the reference to the image of your choice. Keep in mind that it if it is a different size than the original image this may change the appearance of the site in unexpected ways.