In Java, you first declare a variable by stating its type and name, like 'int age;'. This tells the program to reserve space for a number called age. At this point, age has no value yet. Next, you initialize the variable by assigning a value, for example 'age = 25;'. Now age holds the number 25. Finally, you can use the variable, such as printing it with System.out.println(age);. Trying to use a variable before giving it a value causes errors. This step-by-step flow helps you understand how variables work in Java.