Enter XRDS-Simple (aka Yadis), the discovery mechanism used by OpenID and OAuth. It lets a client query the URI http://orkut.com to find out what URI to use to retrieve friends. Perfect!
Except, that /friends/{userid} isn't a URI -- it's a recipe, or template, for a URI. So XRDS-Simple can't actually technically hand that to you, because it only hands out URIs. It could hand you a list of every possible URI, starting with user aaab and ending with user zziee, but that's not too scalable.
So I invented the URI-Template parameter, which uses a URI Template:
The idea is that the discovery document can use URI-Template wherever it could use URI, letting it specify an entire class of URIs in one fell swoop. Of course the client has to know about the template parameter names and how to use the endpoint, but that's the same no matter what: The clients have to know how to deal with the URIs once they have them, based on the spec. The template parameters are baked into the spec, the exact URI format isn't.
Note that this also means a site could outsource its API to an entirely different site. And if you have a personalized discovery document for a given user, you can still use concrete URIs and everything works as it does in normal XRDS discovery.
Updated at to clarify that the new thing is the URI-Template element, not URI templates in general.