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I was wondering how spells with an AOE work. say I have a spell with AOE 4, do you roll to hit every model under the template separately? Or does it work in exactly the same way as say a Khador mortar?

Nope, anyone under or partially under the template is hit and takes a damage roll at half the POW of the attack (round up). Note that they are 'hit', but not 'directly hit' (which is the trigger for a full POW damage roll).

I think there's a few exceptions, but they are noted, usually something like, "Make a magic attack roll against all models under the template. Any models that are hit..."