Yes, take different files and compile them together into a DF-readable set of raws. That was its chief use, the variable templates were just a tack-on addition. For example, you can have several dozen files submitted by different people, with possible duplicates in them. Feed those into Modbase, and you'll get, ideally, one file with all creatures and no duplicates.
edit to the above: it does both, if told so. It leaves no duplicate entries (creatures, items, etc), and does different things depending on the first tag in an entry, which acts as a key. If the tag tells to overwrite, the duplicate completely replaces the existing entry. If it tells to add only, it does not touch existing tags, only adding missing or multi-applicable ones (ATTACK, BIOME, PREFSTRING, etc). If there's no key, it overwrites any present tags and adds any multi-applicable ones. There are special syntax tags to delete existing tags or parts of tags by filter. Plus, "species handler". You can make a new creature with a new name, but tell Modbase to copy all tags from another creature, and treat all tags in the new creature as if it was a duplicate. For example, if you were to make a different species of shark, you could use another shark and just state everything that changes in it - size, color, biomes, etc. It was/is a powerful tool, it just won't work with the new version. And it's in VB, so it's terribly slow at times.
edit2: oy, almost forgot. Footkerchief, can you dig up links to all preview raws of the next version posted to this day? I'll need to begin building listings of "duplicateable" tags and formats for the new structures like attacks and castes.