In Next.js 13, Layouts (layout.js) are used for persistent UI components like headers, footers, or sidebars, remaining consistent across navigations within a route subtree. They are static and don’t re-render. Templates (template.js) are reusable structures that generate a fresh DOM for every navigation, ideal for dynamic UIs, animations, or resetting states. Use layouts for stable, shared structures and templates for UIs requiring re-creation. Both are essential tools for flexible and optimized app design.