Substitution is the automatic conversion of wikitext of a page when the page is saved, in that the wikitext refers to one or more templates, variables, or parser functions.
In the case of template substitution, the template call is replaced by the template content with substitution of the parameters. Thus, the template is used as macro and the page is macro expanded when the page is saved rather than, as usually happens, when the page is viewed.
In other words, when you "subst:" a template... the entire template is not only called, but saved, to the page you are editing, using the specific variables you input.
- Help:Transclusion (the opposite of substitution)