Environmental variables are a crucial aspect of configuring development environments and storing sensitive information. The `daytona env` command provides a streamlined method for setting, managing, and using environmental variables across various workspaces. This simplifies configuration and enhances security, especially when collaborating on projects. To successfully use the `daytona env` command, ensure that tools like Daytona, Docker, and Visual Studio Code are installed and properly set up on your system. You can set environment variables using the `set` command and verify their presence by running the `list` command. Creating a new workspace with the `create` command allows you to access these variables across multiple containers and development tools. Best practices for managing environmental variables include securing sensitive information, following naming conventions, and troubleshooting any issues that may arise. By understanding how to use the `daytona env` command effectively, developers can create more flexible and configurable development environments with dynamic configuration.