Yes, index.phtml is a template (basically all HTML with a bit of PHP). All the other templates also use the .phtml extension and everything works with them.
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<li><a href="/path" class="header-link">y</a></li>
In the first line, nothing is underlined. In the following line, the header-link class value is underlined with an "Undefined CSS class (header-link)" warning. When I hover over the non-underlined header-link class, it does not show me the class CSS. Other files in the project do show CSS snippets when I hover over the class names (including the header-link class). The CSS snippets are from files in a directory that I defined as my web root using the Web Root Folders feature so it does appear to work.