In general, it's the same processes as one would use to create a web page. Emails are really just web pages with a few extra conditions (mostly due to trying to support clients like Outlook Express, which is horrendous.)
Unlike web pages, using an HTML table for the overall page frame works best, even if the "table-innards" are all responsive elements. Having that primary table, table row, then table cell helps prevent older email clients from poorly rendering the overall size. If it were not for email clients such as Outlook, I suspect it would be possible to do away with tables entirely.
CSS can be tricky. Inline CSS is preferred and works best. References to the
<style> tag in the head or a link to an external style sheet work on some email clients, but may not in others. If the desire is to support only modern email clients this isn't such an issue. But again, to support older email clients, inline is best.
In addition, it can be tricky to support some email clients overall. For example G-Mail in a browser window may drop background CSS images applied to the body (it may even drop a color applied)... So, in general for emails the simpler the better.
Then there are logistics... too many images in comparison to HTML text and you can be blacklisted as spam on mail servers. Getting removed from blacklists can be a lengthy processes. So you really don't want to send emails full of images with minimal text unless you are prepared to track down blacklisting issues. Keep image usage relatively low if possible. Or, use a service (Like MailChimp or CampaignMailer, etc). Those services deal with the blacklisting issues for you, that's their job. You can design entirely on your own, then just copy/paste to most of these services and then add some minor relevant HTML the service uses.
You can use templates.. or write the markup. It's helpful to write the markup. You have far more control over things that way. But if you don't know enough or aren't comfortable with that, templates are fine.
It's traditionally no longer done via Photoshop. Although, in the 1990s-2000s Photoshop exporting HTML was common. It's just not a very good solution nowadays due to the need for responsive pages/emails.
It's also best to think "mobile first" where emails are concerned. More people view on a phone/tablet than on a desktop. So starting narrow and working upwards generally results in better design overall. I start at 320px.. then work up to 700px (the max width I'll use for emails), then deal with support issues for older browsers.