Custom page template creation requires a two-step process: create the template through the site editor, then manually configure theme.json to properly register it with WordPress.
Start by creating a custom template through the site editor’s template creation dialog, giving it a descriptive name and building the layout. After saving and exporting, the template file appears in your theme but with technical naming.
The exported template initially has a system-generated name and isn’t properly associated with specific post types. This makes it functional but not user-friendly or properly integrated with WordPress’s template system.
Manual theme.json configuration is currently necessary to complete the custom page template workflow – a limitation that will hopefully be addressed in future WordPress versions.