WPF Templates Differences

UserControls are meant to compose multiple WPF controls together, in order to make a set of functionality built out of other controls. This is often used to compose a portion of a window or screen in order to organize your development by allowing you to group multiple pieces of functionality into one "control". For example, if you wanted to make a control for editing a User which provided text boxes for first and last name, age, etc., a single UserControl could be dropped onto a Window and bound to a User instance to edit this. (In this case, you're using standard controls, such as TextBox, to "compose" a control for a more complex purpose.)

A CustomControl, however, is meant to be a new single control. This would typically be a replacement for a built-in control (which could not be redone via templating). I've found that the need for CustomControls is actually fairly rare in WPF, since the WPF templating options and attached properties allow you to do nearly anything with standard controls, once you learn them fully.