Understanding Styles in Microsoft Word
You can attach the template to the document using that dialog. You do not click on the Add button but rather the Attach button. Check the box to import styles. Click OK.
Then go back in that dialog, uncheck that box, and click OK.

This does nothing to format your document but does make those styles available to you when you are formatting it.
Templates in Microsoft Word

Start by applying a Body Text or Normal style to everything in the document. Then apply other styles to text you want to be different from that.
3. Using Styles to Format Text

You replace any style definitions in the document with those from the template. You do not erase existing styles, you may add styles.

You can delete styles, not sure why you want to bother. Some built-in styles cannot be deleted. All styles can be hidden.
Managing Word Styles by Suzanne Barnhill, MVP