Environment variables are simply strings of text and numbers that contain data. For more info, Read This.
Evironment variables can be used in the save game location paths inside script and used by other applications such as SyncBack which is a backup application that's very useful with the information on this Wiki.
Windows XP VariablesEdit
A full list is documented here: http://vlaurie.com/computers2/Articles/environment.htm
Windows Vista / 7 VariablesEdit
A full list is documented here: http://technet.microsoft.com/en-us/library/dd560744%28v=WS.10%29.aspx