Why can't the $rootScope be accessed in the template of a directive with isolate scope?

You can try this way out using $root.blah

Working Code

html

 <label ng-click="test($root.blah)">Click</label>

javascript

  angular.module('app', [])
    .controller('Ctrl', function Ctrl1($scope,  $rootScope) {
        $rootScope.blah = 'Hello';
        $scope.yah = 'World'
    })
    .directive('myTemplate', function() {
        return {
            restrict: 'E',
            templateUrl: 'my-template.html',
            scope: {},
            controller: ["$scope", "$rootScope", function($scope, $rootScope) {
                console.log($rootScope.blah);
                console.log($scope.yah);

                $scope.test = function(arg) {
                    console.log(arg);
                }
            }]
        };
    });

Generally, you should avoid using $rootScope to store values you need to share between controllers and directives. It's like using globals in JS. Use a service instead:

A constant (or value ... use is similar):

.constant('blah', 'blah')

https://docs.angularjs.org/api/ng/type/angular.Module

A factory (or service or provider):

.factory('BlahFactory', function() {
    var blah = {
        value: 'blah'
    };

    blah.setValue = function(val) {
      this.value = val;
    };

    blah.getValue = function() {
        return this.value;
    };

    return blah;
})

Here is a fork of your Fiddle demonstrating how you might use either

1) Because of the isolate scope $scope in your controller Ctrl and in the directive controller don't refer to the same scope - let's says we have scope1 in Ctrl and scope2 in directive.

2) Because of the isolate scope scope2 do not prototypicallly inherit from $rootScope ; so if you define $rootScope.blah there is no chance you can see it in scope2.

3) What you can access in your directive template is scope2

If I sum it up, here is the inheritance schema

    _______|______
    |            |
    V            V
$rootScope     scope2
    |
    V
  scope1


$rootScope.blah
> "Hello"
scope1.blah
> "Hello"
scope2.blah
> undefined