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(lemmy.world)
I use Arch btw
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Yes.
Many applications have configuration files. Historically these files were placed in your home directory aka "on the floor". The variable mentioned defines a directory where these files should go. Many applications ignore this.
A non-linux version of this meme might go,
"Here is the pizza you ordered"
"Great, could you put it in my hands"
"Lol (throws pizza on floor)"