What problem does this feature solve?

I tried petite-vue and found it had this nice $template feature where I could specify the id of a template element and it would render that.

What does the proposed API look like?

Same $template in Vue 3 as exists already petite-vue.

https://github.com/vuejs/petite-vue#components-with-template

see https://vuejs.org/api/options-rendering.html#template

Oh, so this already works. This is really nice, I wasn't aware of that. It is a bit confusing though that it is called template in Vue but $template in vue-petite.