Variables that are used in scripts are called scripting variables. Scripting variables enable one script to be used in multiple scenarios. For example, if you want to run one script against multiple servers, instead of modifying the script for each server, you can use a scripting variable for the server name.

An error has occurred while establishing a connection to the server. When connecting to SQL Server 2005, this failure may be caused by the fact that under the default settings SQL Server does not allow remote connections. (provider: TCP Provider, error: 0 - No connection could be made because the target machine actively refused it.) (Microsoft SQL Server, Error: 10061)

Most people probably know that can use the variable %0 in a batch file to get the name of the executing batch file. However if you use that in conjunction with some batch parameter modifiers you can easily split that into a drive, directory or filename. Therefore to get the location of an executing batch file from within that batch file you can use the variable %~dp0.