The strategy pattern defines a family of algorithms, encapsulates each one, and makes them interchangeable. It allows an algorithm's behavior to be selected at runtime. As an example, a navigation app could use different strategies for routing by car, bus, or walking. Benefits include swapping algorithms at runtime and isolating implementation from client code. Drawbacks include increased complexity if there are few algorithms, and clients needing awareness of strategy differences. The template method pattern defines an algorithm's structure in a superclass but lets subclasses override specific steps without changing the overall structure. It is used when different classes perform similar algorithms with minor differences.