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)”
That scene, https://youtu.be/6ovsKnljcIk , was a reference to this actual event, https://youtu.be/IW7Rqwwth84