In a traditional compiled-language process, a chunk of source code, your program, will undergo typically three steps before it is executed, roughly called "compilation":

1. Tokenizing/Lexing: breaking up a string of characters into meaningful (to the language) chunks, called tokens. For instance, consider the program: var a = 2;. This program would likely be broken up into the following tokens: var, a, =, 2, and ;. Whitespace may or may not be persisted as a token, depending on whether it's meaningful or not.

   Note: The difference between tokenizing and lexing is subtle and academic, but it centers on whether or not these tokens are identified in a stateless or stateful way. Put simply, if the tokenizer were to invoke stateful parsing rules to figure out whether a should be considered a distinct token or just part of another token, that would be lexing.

2. Parsing: taking a stream (array) of tokens and turning it into a tree of nested elements, which collectively represent the grammatical structure of the program. This tree is called an "AST" (Abstract Syntax Tree).

   The tree for var a = 2; might start with a top-level node called VariableDeclaration, with a child node called Identifier (whose value is a), and another child called AssignmentExpression which itself has a child called NumericLiteral (whose value is 2).

3. Code-Generation: the process of taking an AST and turning it into executable code. This part varies greatly depending on the language, the platform it's targeting, etc.

   So, rather than get mired in details, we'll just handwave and say that there's a way to take our above described AST for var a = 2; and turn it into a set of machine instructions to actually create a variable called a (including reserving memory, etc.), and then store a value into a.

   Note: The details of how the engine manages system resources are deeper than we will dig, so we'll just take it for granted that the engine is able to create and store variables as needed.