Put yourself in the compiler's position: when you forward declare a type, all the compiler knows is that this type exists; it knows nothing about its size, members, or methods. This is why it's called an incomplete type. Therefore, you cannot use the type to declare a member, or a base class, since the compiler would need to know the layout of the type.
Assuming the following forward declaration.
class X;
Here's what you can and cannot do.
What you can do with an incomplete type:
- Declare a member to be a pointer or a reference to the incomplete type: - class Foo {
    X *p;
    X &r;
};
 
- Declare functions or methods which accept/return incomplete types: - void f1(X);
X    f2();
 
- Define functions or methods which accept/return pointers/references to the incomplete type (but without using its members): - void f3(X*, X&) {}
X&   f4()       {}
X*   f5()       {}
 
What you cannot do with an incomplete type:
- Use it as a base class - class Foo : X {} // compiler error!
 
- Use it to declare a member: - class Foo {
    X m; // compiler error!
};
 
- Define functions or methods using this type - void f1(X x) {} // compiler error!
X    f2()    {} // compiler error!
 
- Use its methods or fields, in fact trying to dereference a variable with incomplete type - class Foo {
    X *m;            
    void method()            
    {
        m->someMethod();      // compiler error!
        int i = m->someField; // compiler error!
    }
};
 
When it comes to templates, there is no absolute rule: whether you can use an incomplete type as a template parameter is dependent on the way the type is used in the template.
For instance, std::vector<T> requires its parameter to be a complete type, while boost::container::vector<T> does not. Sometimes, a complete type is required only if you use certain member functions; this is the case for std::unique_ptr<T>, for example.
A well-documented template should indicate in its documentation all the requirements of its parameters, including whether they need to be complete types or not.