Custom Variables are used to assign values that you want to consistently use in your recipe. They are very useful when using formulas/expressions as you can use the variable in different places in the formulas or rules instead of selecting the value manually when creating the new rule or expression.
For example, if today you consider a keyword whose cost/conversion is two times that of the ad group average to be expensive then you can define a variable 'expensiveness factor' and assign it a value 2.
Later on, if you want to change this factor to 1.5 you can just change the value of the variable instead of having to change the number everywhere in the recipe.
Another example is if you add a margin to all costs when calculating cost/conversion, this margin can be defined as a custom variable.
You can add a new Custom Variable by pressing the +ADD button on Custom Variables in the main recipe settings:
Once you set the name and value (description is optional), you'll start seeing it as its own value on the rule settings.