A Content Section is a document that lives in SharePoint which contains essential content for the template that can be 'stitched' into the template at merge time.
Content Sections are a great replacement for SharePoint Rich Text fields. This is because you can modify the Word document to look exactly the way you want it with all the functionality for personalization that Microsoft Word has to offer. You can also simply add this content anywhere in your template where you choose. It will appear as a hyperlink content control but will populate with data when merging.