Environment variables in the bash shell help you in several ways. Certain built-in variables change the shell in ways that make your life a little easier, and you can define other variables to suit your own purposes. Here are some examples of built-in shell variables:

- PS1 defines the shell's command-line prompt;

- HOME defines the home directory for a user;

- PATH defines a list of directories to search through when looking for a command to execute.

Source: http://lowfatlinux.com/linux-environment-variables.html