This page describes how the template itself works. For general information about the Babel system and how it may be used to display the languages you know, see Wiktionary:Babel.
Your Babel box is for saying what languages you know and approximately how well you know them; you use it by adding something like {{Babel|en|fr-4|de-2|ru-1}} to your user-page, which produces the box at right.
Each language code — en, ru, etc. — corresponds to a userbox indicating that you're a native speaker of the language. A language code with a hyphen and a number 0 through 4 — fr-2, ru-3, etc. — corresponds to a userbox indicating your approximate level of proficiency in the language. (There's no formal measure; just give your best guess. 0 means "I do not understand this language (or understand it with considerable difficulty)"; 1 means "I am able to contribute with a basic level of this language"; 2 means "I am able to contribute with an intermediate level of this language"; 3 means "I am able to contribute with an advanced level of this language"; and 4 means "I speak this language at a near-native level.") You might find that a userbox might not exist yet for a given language and proficiency level; if so, please feel free to ask for help in creating one.
You can list up to 100 languages. (Technically, you can use the template more than once on your user-page, and thereby include more than 100 languages, but it's probably not useful to list anywhere near that many languages, anyway.)
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Some user templates have gender-specific texts, and the gender is taken from the gender you set in your preferences by default. It can be overridden by using the g= parameter, which takes either m, f or - (not specified).
The - userbox leaves a userbox-sized gap — a blank row, essentially.
The ! userbox starts a new column.
The |header= parameter lets you change the text at the top of the box; likewise, |footer= lets you change the text at the bottom.
The |bordercolor= and |color= parameters let you change the CSS-specified border-color and background-color, respectively.
By default, the box floats on the right. The align parameter may be set to left to left-float it instead, or to none to leave it in the normal flow of your user-page.
So, for example, {{Babel|en|fr-4|-|!|-|de-2|ru-1}} produces: