This template stands for "Public watchlist image", and is intended to simplify the process of adding articles in the main namespace to 'shared watchlist' pages, suitable for use with the {{public watchlist}} template.
To add a bullet-pointed line to the watchlist page containing links to the article and to its talk page, add the pwli template (preferably subst'ed) with the article name as its only parameter. For instance, {{pwlimg|Foo}} will produce the following:
(Be aware that subst'ing appears to add a newline before the text it substitutes, which will affect the spacing of your list as you add new items to it.)
Also see {{pwlr}}, a similar template for redirects and {{pwli}}, for single items.
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