In reply to Steve Grant.

Another article on the subject of "PHP or HTML template files in FSE"
https://fullsiteediting.com/lessons/php-files-or-html-files/

During the core editor and customize meeting on May 28th 2020, it was clarified that templates and template parts will likely be PHP files instead of HTML files.The background to this is the need for dynamic urls and the ability to translate text strings.

I'm not sure when this decision was reversed, or who made that decision and why.