By Edith C.
This is very useful when you are talking about quickly duplicate or backup your SharePoint Sites structure and information. The site template is saved through the SharePoint web user interface, which empowers users and avoids the need for administrative intervention. Now that we have a customized site, we are ready to save it as a custom site template for others to reuse.
The steps to save the custom site template (for a SharePoint Team Site) are shown below:
1. Navigate to Site Settings in your customized site.
2. Select Save site as template under the Look and Feel section.

3. Fill out the Save Site as Template page and then click OK. At this time you must decide whether to include the list and library content.

Saving a site template.
The template is now saved to the site template gallery. You manage the Site Template Gallery through the Top-level Site Administration page. Because the Site Template Gallery exists at the top-level site of a site collection, the newly created custom template is accessible only from that site collection.

Applying the Custom Site Template
The next time you create a site, your custom site template appears in the Template Selection web page. In fact, all custom site templates for the current site collection appear in the Template Selection dialog. Notice that the title and the description that we specified while saving the custom template are reflected in the Template Selection web page.

After we apply the template to a new site, it looks exactly like the original site from which the template was saved.
Thanks J