The idea here is that things in Java can contain other things. A compound name is a kind of path to an item through one or more levels of containment. Programs manipulate data that are stored in memory. In machine language, data can only be referred to by giving the numerical address of the location in memory where it is stored. In a high-level language such as Java, names are used instead of numbers to refer to data.
Variables are actually rather subtle.
Properly speaking, a variable is not a name for the data itself but for a location in memory that can hold data. You should think of a variable as a container or box where you can store data that you will need to use later. The variable refers directly to the box and only indirectly to the data in the box. Since the data in the box can change, a variable can refer to different data values at different times during the execution of the program, but it always refers to the same box. Confusion can arise, especially for beginning programmers, because when a variable is used in a program in certain ways, it refers to the container, but when it is used in other ways, it refers to the data in the container.