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I notice that within every template of magento. almost 99% of all the code has a ($this->) in it to call methods. This makes me to believe that some how some way every template is included within some sort of class. My question is how do they have it structured to do that ?
All the classes are extended off of a few main ones using inheritance. If you are referring to the templates, that is controlled by the Block code and the variables that are available to the templates are via the assign() function in the Block code.