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Themes create the public (front-end) interface for a WordPress site.

WordPress incorporates a "templating" system for the creation of the public interface for the site - the part seen by ordinary site visitors. Code that leverages this templating system to create the final public interface is called a "Theme". Theme code is housed in the wp-content/themes/ directory.

References:

  1. Official WordPress Theme development handbook.

  2. Theme development reference is an old but still useful codex.

  3. Template Hierarchy for WordPress Themes.