Themes allow you to override the core, so you can make changes to a website without putting the core at risk. Every module has default templates to start of with, though a theme can override each and everyone of these default templates. This, however, doesn't mean you have to overwrite the entire core. You only overwrite files that will make a difference.website4free system will detect all the files in the template folder.
If you put the filestructure of the core and a theme side by side, you'll see that these resemble each other. This should give you a further insight in how themes work.
The template directory structure should be
It will be very easier to develop the new template, if you copy the existing default template provided by website4free system.
Please use the following link to download the default template.