Good morning Eric.
Think way back to learning trigonometry and geometry in school- you learned to graph functions on graph paper. Custom was to designate a place as the origin, or the point where the X-coordinate and Y-coordinate were each zero. Like a number line, positive X-coordinates are to the right, negative X-coordinates to the left. Same for the Y-axis with positive being up and negative being down.
AutoCad uses the same concept- your model space area has a World Coordinate System, with a fixed zero point (or origin) where the X-coordinate, Y-coordinate, and Z-coordinate are all zero. It never moves, any line or other entity drawn at zero-zero will always be at zero-zero. In Civil we customarily draw to some surveyed coordinate system, so all our lines, points, and other things are quite a distance up from the origin.
The WCS origin never moves- it is not capable nor is it allowed to move. It's a constant within your drawing that you can always use knowing it's at the same place. Likewise every other point in the WCS is constant with respect to the origin. The 'graph paper' that you are 'drawing' on in model space never changes. With respect to the WCS, a point at (or a line through) the point coordinate 100,100 will always be at (or through) that point at 100,100.
Sometimes you need to use different drawing coordinates and axes. For example, if I am drawing features along a road, and that road is straight but instead of running perfectly east-and-west it is at some angle, say it runs Northwest-to-Southeast. I want to draw things parallel to the road, but that road is not parallel to my WCS X-axis.
I will create a UCS (a User Coordinate System). My new origin is now not at the WORLD zero-zero. It's at some convenient point on my road, say where my major road alignment intersects a side road. And the X-axis is now aligned with the northwest-southeast sloping centerline of my road.
So now I can turn on ORTHO, and every line I draw will be parallel to my road centerline, even though that line is running at an angle on my screen / in modelspace. That's just one example of using a User Coordinate System, in a way that makes drawing a little easier or more efficient.
There are a lot of tools for controlling the UCS- you can save them, give them a name, and recall them later for re-user. I do that with the road centerlines a lot, as I explained above, because I often need to draw things on channelization plans that are parallel to my centerline, and very few roads are actually perfectly North-South or East-West.
You can grip-edit the UCS icon and drag it around with the mouse.
You can rotate the axes around each other - very handy for drawing things in three dimensions. I detail out traffic signal poles in 3D and check them with known utility objects up in the air above my road.
Any time you're working in a custom UCS you can return to the World Coordinate System by typing UCS > W.
If your drawing gets a weird rotation to it due to some funky UCS, go back to WCS, then type PLAN <enter> to reset to an orthogonal plan view relative to WCS.
As you discovered, each Paperspace (layout) has an origin point (a zero,zero) in the WCS. It's the same WCS and has an origin at zero-zero, but you're drawing on the "sheet of paper" that holds your border, titleblock, and your viewport into modelspace.
Be very careful where you are defining blocks, and what WCS or UCS you may be working in. Do not create blocks in paperspace if you will be using them in modelspace. I'd suggest just always making blocks in modelspace, always using the WCS.
Do not make a block in some random place in your drawing- if, like me, you draw up at project plane (or state plane), your drawing coordinates are up around 600000,1200000 (give or take- I'm in Washington State). If you draw the thing you want to make into a block up there, but accidentally use 0,0 as the INSERT POINT for your block, that block will always be six hundred thousand feet away from where you want it to be (or worse).
That's why the choice "pick insert point" is so important when you define a block. Suppose you want your new block to be a manhole cover, for example.
And you just drew it up at your project coordinates where you need to show a manhole. If you pick the center of the circle as your Insert Point, all is good, and that block will come in centered around whatever point you pick.
However, if you forgot, and left the checkbox checked to use WCS zero-zero as the insert point, your block insert point is 600000 by 1200000 feet away, because that's where your project data all lives in the WCS. When you next insert the block and pick the point where you want it, the block will be drawn six hundred thousand feet away or more.
I am not sure what your middle bullet point means: "Model space containing your paper space template". By 'template' do you mean your titleblock?
The convention where I work is that all drawing happens in modelspace, all titleblocks are in paperspace.
Each plottable sheet, containing the titleblock and viewports, is on a separate layout tab. Each layout tab has a titleblock, and one or more viewports that "look through" the page into the model, at the appropriate zoom factor.
Jeffrey Rivers
Win 10 Pro 64-bit, Intel i9 3.7GHz, 64 GB
NVIDIA RTX A4000
C3D 2020 V13.2.89.0