Variables are used in rules, where they can set a new value of an element.
Example:
You want to create a new product name from different elements to contain: manufacturer + original product name from store + product size parameter. To do this, you create a new OVERWRITE rule that will overwrite the PRODUCTNAME element with these 3 variables: %MANUFACTURER% %PRODUCTNAME% %PARAM_SIZE% . An example of such product name after the rule is applied would be Adidas Men T-shirt XXL.