ENV variables are settings or data that the entire system has access to, you don't specify it when you start Quake, but at some point before using the SetEnv command in a Shell window.
e.g.
SetEnv ENV:quake1/cd_unit 0 sets the quake1/cd_unit variable to 0.
If you open the ENV: directory in Workbench or DOpus, etc, you'll see there's a quake1 directory and a file in it called cd_unit. That's just a text file containing '0'.
That's how Environment Variables work. Everything in ENV: is lost when you reboot, however you can save it to ENVARC:, and the system will restore it on boot-up.
Sounds familiar? This is the same system used for the 'Save' and 'Use' options in Workbench Preferences. If you Save, the data gets written to ENV: and ENVARC:, if you choose 'Use', the data just gets stored in 'ENV:' (which is usually on the RAM disk.)
So if you wanted to set these variables permanently:
SetEnv ENVARC:quake1/cd_unit 0 sets the quake1/cd_unit variable to 0.
Hope that helps you :-)