System backup and restore question

ver 1.3.8
Couple of questions
When I make a change to the cart through the admin panel, not adding or removing products, are those changes stored in the database or in the site files I download through FTP?

If I create a problem/error by editing a file locally and uploading ( such as editing header.php )can I just reload a copy of that file/folder/site I have copied locally that did not have that alteration on it? I have created errors before and just removed the install and started again, looking for the correct way to do this.

Can I create a custom template by copying the classic folder. I have created a custom template with the instructions on the forum but would rather tweak the classic layout.

Last what is the big advantage of having a custom template folder? Just upgrades?

When I make a change to the cart through the admin panel, not adding or removing products, are those changes stored in the database or in the site files I download through FTP?

Most changes such as categories, articles and configuration options done through the Zencart admin panel are stored in the database. A few changes, especially file editing in tools ---> define pages editor are stored in files.

If I create a problem/error by editing a file locally and uploading ( such as editing header.php )can I just reload a copy of that file/folder/site I have copied locally that did not have that alteration on it? I have created errors before and just removed the install and started again, looking for the correct way to do this.

If you copy again one of the original file over a file that you changed, yes you cancel your changes. The right way to make files alteration is to use the template override. Here is an article explaining how to use it : https://www.zen-cart.com/tutorials/index.php?article=36