Can someone please explain easyrsa vars options for PKI generation

Solution 1:

These are the settings for the certificate (certificate is a public key + (this) info signed by a Certificate authority).

So in your case, these are you country (where you live, where your company is), province (same), city (same), organization name, email, common name (unique for this CA), name, and organizational unit - in this order.

The last two lines are a path and a pin for PKCS11 (usually for smartcards).

I guess you're using easy-rsa; if you don't set this variables, it asks you for them, when you run the tool to generate a certificate.