import sys
import argparse
import yaml
import jinja2


def render(template_string, context, strict=False):
    template = jinja2.Template(template_string)
    if strict:
        template.environment.undefined = jinja2.StrictUndefined
    return template.render(**context)


def main():

    parser = argparse.ArgumentParser()

    parser.add_argument('config', nargs='*', type=argparse.FileType('r'),
                        help="One or more YAML files to read")
    parser.add_argument('--template-file', '-f', dest='template',
                        type=argparse.FileType('r'), default=sys.stdin,
                        help=("Config file template. If not supplied, ",
                              "stdin is used"))
    parser.add_argument('--out', '-o', dest='out',
                        type=argparse.FileType('w'), default=sys.stdout,
                        help=("Output file to write. If not supplied, ",
                              "stdout is used"))
    parser.add_argument('--strict', dest='strict',
                        action='store_true', default=False,
                        help="Raise an exception on undefined variables")

    args = parser.parse_args()

    context = {}
    for file in args.config:
        context.update(yaml.load(file.read()))

    template_string = args.template.read()

    rendered = render(template_string, context, args.strict)
    args.out.write(rendered)


if __name__ == "__main__":
    main()

import sys
import argparse
import yaml
import jinja2


def render(template_string, context, strict=False):
    template = jinja2.Template(template_string)
    if strict:
        template.environment.undefined = jinja2.StrictUndefined
    return template.render(**context)


def main():

    parser = argparse.ArgumentParser()

    parser.add_argument('config', nargs='*', type=argparse.FileType('r'),
                        help="One or more YAML files to read")
    parser.add_argument('--template-file', '-f', dest='template',
                        type=argparse.FileType('r'), default=sys.stdin,
                        help="Config file template. If not supplied, "
                             "stdin is used")
    parser.add_argument('--out', '-o', dest='out',
                        type=argparse.FileType('w'), default=sys.stdout,
                        help="Output file to write. If not supplied, "
                             "stdout is used")
    parser.add_argument('--strict', dest='strict',
                        action='store_true', default=False,
                        help="Raise an exception on undefined variables")

    args = parser.parse_args()

    context = {}
    for file in args.config:
        context.update(yaml.load(file.read()))

    template_string = args.template.read()

    rendered = render(template_string, context, args.strict)
    args.out.write(rendered)


if __name__ == "__main__":
    main()

Fix argparse arguments. Oops.