Studio makes extensive use of components, and it includes a large library of built-in components for common tasks. You can write your own components inside Studio (Business Objects), and you can include different technologies as components in the component catalog.
Components define a type, which can be used to declare variables. All components can be used to declare a local variable or an argument variable, but not all components can be used as instance variables.
This happens because instance variables are usually persisted (a process instance variable) or transferred (a Presentable Business Object instance variable). And, for persistence or instance variable transference to work, the content of such variables must support serialization. Some components do not support serialization.