Say a dog breed comes with either brown or amber eyes. In the file, it would look something like this:
#2
14, 105
38, 105
#1
14, 95
38, 95
##

Variations are listed with #[number]
When it says ##, it is the end of a variation set. It's important to always include that after the last variation or the petz tend to come out of the AC looking messed up (though it's usually easy to fix, at least!).
When you have a set of variations, the highest variation is at the top, the lowest at bottom. Eg if there are three variations they go 3, 2, 1, stop.
Basic variations are just that easy!
You can set up variations pretty much anywhere in the file. Color Info Override, Fuzz Override, Outline Info Override, Texture List, Add ball, Ballz Info, Linez... etc.
When you use Overrides, first number listed is the ball number, and 2nd the change (Colour in Color Info Override, Fuzz in Fuzz Override etc). Most common is perhaps Color Info Override. You can also list a couple of extra numbers in Color Info Override if needed, its numbers go like this: Ball number, colour, group, Texture. So you can use it to set up texture variations too.

As a note, if you do addballz variations, remember that each variation must contain the same number of balls, especially if you have other addballz below the variations. This is because otherwise the ball count will be incorrect for some variations, and then the Linez will become messed up. But for most variations, like the common colour variations and the likes, you don't need to worry about each variation being equally long, it doesn't matter.

Locking variations
Locking variations is dead easy when you know how.
Let's say we have a file that comes in either solid white or black and tan, which uses paintball markings.
We have three set of variations (Eyelids, paint ballz, color info override), but we want the paintballs to only show up on the black and tan dogz and we want the eyelids to match too. Then we need to lock the variations.
You lock by adding a letter to the TOP variation. Some people think you should add a letter to each variation in that set, but you shouldn't do that. Just the top one. Which is why I'm using an example here, so you can see it in action. If you were to lock the three sections we spoke of, it'd look something like this:
[Eyelid Color]
#2.A
(Info for black and tan)
#1
(Info for white)
##

[Paint ballz]
#2.A
(Info for black and tan)
#1
##

[Color Info Override]
#2.A
(Info for black and tan)
#1
(Info for white)
##

The way these locks works is that everything that is locked shows up together. So this file is now set so that whenever #2 in the eyelid section comes out of the AC, the same dog will also have #2 from the Color Info Override and the Paint ballz.
Important is that each variation set that is locked contains an equal number of variations, otherwise the variations will not add up and they won't show up properly. If you don't need info in a section for a certain variation, just leave it empty, like I did in Paint Ballz.
You can pick any letter, doesn't matter. Just remember everything locked with the same letter will show up together. If you need to, you can use a bunch of locked variations using different letters. Just remember, the Eyelid Section only supports one set of variations (you can't add several) so sometimes you need to plan how to set up the colours best!