The InstallTemplate setting is one of the AppSettings
that is contained in the web.config file.
Added in version 3.0 of DotNetNuke, an install template is used to control the installation process. The location of the template is defined in the web.config with the default definition showing:
<add key="InstallTemplate" value="DotNetNuke.install.config"/>
The template is an XML file that contains all the details needed to create a new host install, containing a single portal. For installations that want to control the creation of new host instances of DotNetNuke (e.g. to set up company specific settings such as SMTP server details), they can edit this file or provide an alternative version and alter the InstallTemplate value.
Further documentation can be found here