They are just key-value pairs of text.
What applications do with it is the important part, and every environemnt variable is used in differrnt places.
PATH for example is used so that if you type in a command, the computer looks in every directory that you put as value in the PATH key for a programm with that name and runs it.
Environemnt variables are available for applications to read, so you can pass information to a programm you start that way, like information on where to find something or what type of something it is.
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