XSLT variables and parameters are closely related in that both involve replacing a name with an associated value (much like an XML entity).
18.7.1 Variables
An XSLT variable is a value that a stylesheet creator stores away for use in some other part of the stylesheet. A top-level variable is one defined outside any template rule. The value is automatically available for use in any template. For instance a variable could hold the company name. The value that the variable holds could even be extracted from the input XML document. Example 18-24 demonstrates.