Templates can have parameters just like stylesheets.

Their names can't conflict with variables.

Example:

<xsl:template match="element">
<xsl:param name="namespace"/>
<xsl:element name="{@name}" namespace="{$namespace}"/>
</xsl:template>

Bad:

<xsl:template match="element">
<xsl:param name="namespace"/>
<xsl:variable name="namespace" select="namespace()"/>
<xsl:element name="{@name}" namespace="{$namespace}"/>
</xsl:template>