Product Variations are used when you have one item that comes in different variations, but you could use the one image in your product catalogue ie, a t-shirt might come in white, blue and red, but each colour will also come in small, medium, and large - so this product will have 2 variations for the one item - 1: Colour, 2: Size.
If you would like further instructions on setting up variations for your website view our instructions here
