Anything you see enclosed in % signs is an "environment variable". (This is a Windows thing, not specific to Office.)
The %appdata% environment variable is created when you log in to a user account, and its value depends on which account you use. The exact location also depends on whether you're on Windows XP or you're on Windows Vista or Windows 7.
For Windows 7, if your account name is "Lisa", then the value of %appdata% would be
so %appdata%\Microsoft would take you to
If you open Windows Explorer (the "Computer" link on the Start menu) and type %appdata%\Microsoft into the address box at the top, and then press Enter, it will automatically open the correct folder for the current user account and Windows version.