If you want to create/use a site template (STP) to create subwebs (sites) within a site collection you just put it in the template gallery which can be accessed in site settings.

 

However, if you want to use a site template to create a root site of a site collection (normally done either in central admin, or through scsignup.aspx), then you need to use STSADM to "install" the template, otherwise you won't see it when picking the templates during a site collection creation.

 

Here's the syntax:

 

 

After you do this, you will need to do an iisreset before the template will appear under the Custom tab in the template selector when creating a new site collection.  Other related stsadm commands you might need to use are:

 

 

I guess it would have been too easy for MS to create a site gallery in central admin for this purpose.