A Configuration element is used in WebTemp*.xml files (see WebTemp.xml) to identify an available site definition configuration within a site definition. It is used in Onet.xml files to define a configuration of lists, modules, and features that are used to create a site from the site definition configuration. In a WebTemp*.xml file, this element is contained within a Template element that specifies the site definition. In Onet.xml, this element is contained within a Configurations element that specifies the configurations whose lists are defined within the Onet.xml.
There is one Template element in a WebTemp*.xml file and one Onet.xml file for each site definition.
The ID attribute associates the Configuration element for a given site definition in a WebTemp*.xml file with the corresponding Configuration element for that same site definition in the Onet.xml.
A site template, as distinct from a site definition configuration, is not defined with a Configuration element. It is defined with a manifest.xml file inside .stp files that is stored in the SharePoint database.