Windows comes with a few environment variables by default to assist batch files or programs in accessing the important location on the hard drive because not all Windows are installed in C drive, probably the temporary folder is set to a different location and etc. A variable is surrounded by percent sign % on both sides and one example is %WinDir% which will output the directory where Windows is installed on the hard drive. You can type the variable at the address bar in Windows Explorer, in the Run box or at the Search programs and files bar in the Start menu and hitting the Enter key will directly open the location in Explorer. The environment variables are not fixed as you can use the SET command to create, modify or delete the variables.
You can find out all the environment variables in your Windows by launching the command prompt (Start > All Programs > Accessories > Command Prompt), type set and followed by hitting the Enter key.
The most common environment variables that I use very often are %LOCALAPPDATA% and %APPDATA% because nowadays a lot of data are stored in that location by third party software such as the Firefox profile, Chrome, Opera, uTorrent and etc. Basically both of the variables points to the current user’s application data folder except one is LOCAL and the other is ROAMING. By typing the variable in the run box, it instantly brings me to that location instead of double clicking through a few folders to get the Application Data folder.
Other than that, AppData folder is a hidden folder and using environment variables allows me to directly open the hidden folder without going through the hassle of enabling show hidden files, folders and drives in Folder Options and then disabling it back when I am done with the troubleshooting.
Useful Environment Variables in Windows 7 is a post from: Raymond.CC Blog