The environment is an area of memory DOS reserves for environment variables. These variables are used to define certain aspects of operating system or other program behavior.
Batch files can define environment variables of their own for use as temporary storage.
The environment is small by default, however. And it can do so only if no RAM-resident programs have been loaded. Like many batch files, NO.BAT keeps its environment variables to itself. It uses them internally and, when finished, deletes them. There's an easy way to get all the environment space you need for such a self-contained batch file.