Hey @dev!
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The way your plugin is configured is correct, so it's weird that you're having this issue.
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About the webpack error. You need to add a validation that will check if the response is valid. If not, you need to return null: if (!prismicContent) return null. This check will prevent your application from breaking during the website build.
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There's no specific way of formatting the template itself.
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Yes, 'pages' is where all Dynamic pages are generated with the help of the plugin. Take a look at this other thread where i answered the difference of creating pages in both ways: