What is the difference between $paged and $page?

I'm creating pagination for my site. Hope everyone can explain to me what below code used for? Thanks in advance.

<?php
if ( get_query_var('paged') ) {
    $paged = get_query_var('paged');
} elseif ( get_query_var('page') ) {
    $paged = get_query_var('page');
} else {
    $paged = 1;
}
query_posts('paged='.$paged.'&posts_per_page=');
?>