Order Confirmaton Email Template defines the layout of the confirmation email that is sent out to a user after having placed an order. The Email template can be found in /components/com_virtuemart/themes/VM_THEME/templates/order_emails/confirmation_email.tpl.php.

They are loaded and filled with content in the file /administrator/components/com_virtuemart/classes/ps_checkout.php, function email_receipt().

The concept is to define placeholders in the template and replaced them by the real contents on load. This is done using the PHP function str_replace.