Parameters are like local variables; they are reusable inputs that apply only to the specific transformation that they are defined in. When defining a parameter, you can assign it a default value to use in the event that one is not fetched for it. This feature makes it unique among dynamic input types in PDI.
If there is a name collision between a parameter and a variable, the parameter will take precedence.
To define a parameter, right-click on the transformation workspace and select Transformation settings from the context menu (or just press Ctrl-T), then click on the Parameters tab.