Many frameworks for working with AWS serverless architectures expose access to CloudFormation, AWS's tool for managing multiple related resources as a single entity. The Serverless Framework is no different and, in fact, the CloudFormation interface is verbatim CloudFormation templating with a few nice add-ons specifically for variables, environment variables included. A common theme here is that this is a huge topic and the details are out of the scope of this book.
CloudFormation creates the RDS instance on our behalf with several lines of setup in serverless.yml. Details aside, note how there are multiple references to ${env:VPC_ID} and other calls to ${env:}. The ${env} syntax is a method for pulling variables from the environment that exists in the Docker container from our process of starting up the container. You may accomplish the same thing on your host system provided you have a way of managing environment variables.
Much of the complexity of this...