WordPress, as you probably already know, is a powerful CMS that is highly customizable. Adding to that high level of customizability are themes and theme settings which can be found in the Appearance menu of the sidebar.
First, themes are a collections of PHP files that are broken into many pieces but constructed in WordPress to create a whole page. The Appearance menu give you the ability to to change themes altogether (limited to ones added to your account), customize the sidebar, colors, layout, site title, tagline, widget areas, footer, menu and navigation links, etc.
Some themes add additional theme settings in this menu.
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