In Java programming, variables and data types are fundamental concepts that play a crucial role in how data is stored and manipulated. A variable acts as a named storage location in memory, allowing developers to store and retrieve values during program execution. Data types, on the other hand, define the kind of data that can be stored in a variable, determining the operations that can be performed on that data. Java features eight primitive data types, including integers, floating-point numbers, characters, and booleans, as well as reference data types for objects. Understanding these concepts is essential for writing efficient and effective Java code.