The `set-vars` Traffic Policy action allows developers to create and reference variables during a request or response, making it easier to manage traffic configurations. With this feature, users can store values in a single place and reuse them throughout their configuration, resulting in cleaner, more readable, and maintainable policies. This enables the use of expressions and interpolations to filter traffic based on variable values, simplifying the process of managing traffic for APIs and apps. The introduction of `set-vars` aims to improve the readability and maintainability of Traffic Policy configurations, making it easier to manage traffic and reduce errors.