What is PATH in environment variables and how to change it

[Windows]

Every process need to do some tasks like to create temporary files, execute some files, store some data etc. Environment variables are set of values that defines default location for these tasks. So whenever a process requires to create a temp file, it looks to environment variable and see the location given by it. 
Environment variables are a set of dynamic named values that can affect the way running processes will behave on a computer. They are part of the environment in which a process runs. For example, a running process can query the value of the TEMP environment variable to discover a suitable location to store temporary files, or the HOME or USERPROFILE variable to find the directory structure owned by the user running the process.[1]