Text enclosed within percent signs indicates to Windows that the text corresponds to a system-wide environment variable. A number of variables are defined by default and are mostly used to refer to specific folders without needing to know in advance where the folder is located.
For example, on most Windows systems the main Windows directory is located at C:\Windows, however there's no rule that says it must be at that location or even that it must be named "Windows". By specifying %systemroot% instead of an actual file path, a user/administrator/developer can ask Windows to fill in the actual location of the Windows directory automatically. Other default variables include %userprofile%, %temp%, and %username% which refer to the user's profile directory, the temporary files directory, and the currently logged-on user's name, respectively.
I don't know why they chose to use %VARIABLENAME% as the format, but that's what they chose.
The dollar sign is a valid file-name character. The only special uses for it involve network shares, specifically hidden/administrative shares.
Edited by Andrew, 12 March 2013 - 01:24 PM.