Custom Variables are used to assign values that you want to consistently use in your strategy. 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.
Examples of Custom Variables
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 strategy.
Another example is if you add a margin to all costs when calculating cost/conversion, this margin can be defined as a custom variable.
Adding a new Custom Variable
You can add a new Custom Variable by pressing the "settings" dropdown on the right of the screen, under "suggestions". This will display various options, and you'll need to select the first one, "variables".
This will prompt a sidebar with the current custom variables (if any), each ones' name, value, and description. You can edit existing ones, delete existing ones, or create new ones. When you are done adding or editing variables, press on save and you'll be taken back to the strategy screen.