The Environment Tab is a tab that is common to all PDE and Java launch configurations. It defines the environment variable values to use when running an application. By default, the environment is inherited from the Eclipse runtime. You may opt to override the environment or append to it.
Variables specified in the tab always replace values in the underlying native environment. However, when "Append environment to native environment" is selected the launched environment is seeded with the native environment, after which variables in the tab replace (existing variables) or augment the set of environment variables. When "Replace native environment with specified environment" is selected, the launched environment is comprised only of the variables specified in the tab.