It is always a best practice in coding that you should never hard code the values. The same applies to Informatica as well. It is always better to pass the values using parameters or variables in place of hard coding them. When you define parameters or variables in the code, you need to pass the values to those parameters and variables. A parameter file serves that purpose. Any value that you hard code can be passed through the Parameter file. You can define the Parameter file at the session level and workflow level.
You must have noticed that the system defined the variable $PMSourceFileDir\ or $PMTargetFileDir\. Similar to that, we can define User Define variables. You can define the variable at both the mapping level and workflow level.
Note
If the value passed remains constant across the session run, it is called parameter, and if the value changes across the session run, it is called variable.
Let's take an example to understand the Parameter file...