On the Add New Replacement Variable page, you will find a form in which you can specify the style to which you want to add a new replacement variable, along with two text fields.
The first text field is for the text you want the replacement variable to find, and the second field should contain the text with which to replace the find text.
When you click the button, any child styles of the style to which you added the new replacement variable will automatically inherit the new variable, while parent styles will be unaffected. This is the principle of inheritance in action.
The find text is not case sensitive, meaning that dog will match DOG, DoG, dOG etc.