docs: Document template format

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+Kontemplate templates
+=====================
+
+The template file format is based on Go's [templating engine][] in combination
+with a small extension library called [sprig][] that adds additional template
+functions.
+
+## Basic variable interpolation
+
+The basic template format uses `{{ .variableName }}` as the interpolation format.
+
+### Example:
+
+Assuming that you include a resource set as such:
+
+```
+- name: api-gateway
+  values:
+    internalHost: http://my-internal-host/
+```
+
+And the api-gateway resource set includes a ConfigMap (some fields left out for
+the example):
+
+```
+# api-gateway/configmap.yaml:
+---
+kind: ConfigMap
+metadata:
+  name: api-gateway-config
+data:
+  internalHost: {{ .internalHost }}
+```
+
+The resulting output will be:
+
+```
+
+---
+kind: ConfigMap
+metadata:
+  name: api-gateway-config
+data:
+  internalHost: http://my-internal-host/
+```
+
+## Template functions
+
+Go templates support template functions which you can think of as a sort of
+shell-like pipeline where text flows through transformations from left to
+right.
+
+Some template functions come from Go's standard library and are listed in the
+[Go documentation][]. In addition the functions declared by [sprig][] are
+available in kontemplate, as well as two custom functions:
+
+`json`: Encodes any supplied data structure as JSON.
+`passLookup`: Looks up the supplied key in [pass][]
+
+## Examples:
+
+```
+# With the following values:
+name: Donald
+certKeyPath: my-website/cert-key
+
+# The following interpolations are possible:
+
+{{ .name | upper }} 
+-> DONALD
+
+{{ .name | upper | repeat 2 }}
+-> DONALD DONALD
+
+{{ .certKeyPath | passLookup }}
+-> Returns content of 'my-website/cert-key' from pass
+```
+
+## Caveats
+
+Kontemplate does not by itself parse any of the content of the templates, which
+means that it does not validate whether the resources you supply are valid YAML
+or JSON.
+
+You can perform some validation by using `kontemplate apply --dry-run` which
+will make use of the Dry-Run functionality in `kubectl`.
+
+[templating engine]: https://golang.org/pkg/text/template/
+[sprig]: http://masterminds.github.io/sprig/
+[Go documentation]: https://golang.org/pkg/text/template/#hdr-Functions
+[pass]: https://www.passwordstore.org/
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