Types of variation
Some variation in a variable's values can sometimes be explained in terms of differences between groups that have been combined in the full data set.
Forecasts of rainfall in Moorings (Monze), Zambia
For any type of forecast (group), the lower the variation in rainfall, the better the quality of the forecast.
Predicting a future value
The grouping of values is usually fixed by the nature of the data set. If there is low variation within groups, knowledge of group membership results in more accurate predictions of future values than would be obtained if group membership was not known or used.
Maximum temperatures in Boston, USA