The Template is the whole HTML code for the design of your blog. When you set up a new blog then Blogger asks you to pick a template (minima, denim, etc.) This template determines the look of your blog from the margins to the header to the fonts! There are also 3rd party templates that you can download from the internet.
The Background is simply the image that is behind your text. It is easily added to the blog by adding an HTML gadget or the background HTML is directly added to your Template HTML.
Changing your Background is easy(ish). When you change your background you usually won't lose any widgets or have any spacing issues.
Changing your Template, after your blog is already established, can be very difficult. And it is suggested that you pick the right one from the start- to avoid the headaches.
And now your reward for reading, a new template site: Our Blogger Templates
My friend recently used this site for her new photoblog. I was very impressed with the professional look. Check out her blog here.
Below is a taste of what Our Blogger Templates has to offer, (did I mention that it's Free?):