Environment Variables are key-value pairs used by operating systems to store information about the environment in which processes run. They can include data such as the system's path, user preferences, and configuration settings. Programs can access these variables to adapt their behavior based on the environment. These variables are often set at the system level or user level and can be modified as needed. For example, the PATH variable tells the system where to look for executable files. By using environment variables, developers can create more flexible and portable applications that work across different systems.