Definition: In a mathematical context, interpolation is to estimate the value(s) between two known values. In programming, specifically with regards to strings and variables, it typically means to replace the variable with it's value. Interpolation occurs when a program is run - in other words, it is dynamic. In perl, these lines:
Produces the output "There is some data in this line.". The variable called $myVariable is interpolated in the context of the string. It is replaced with the value that it contains.
$myVariable = "some data"; print "There is $myVariable in this line.";