Product Variations is a just a saying really, and here is why.
To Create a New Product for Sale:
1) You need to define a Product Display and a Product Type
--- Product Display is the Content Type, the actual page someone lands on to purchase you product. This is where your title, body, etc lives.
--- Product Type is the entity that contains the SKU, Price, and any specific fields
2) Add a Product Reference field to your Product Display
3) In your case, with individual products, you would add 1 Product to each Product Display. So if you were selling a Rocking Chair, you would create a new Product Display with the Title, Description, etc. Then add a Product to the node, and in the product set the SKU and Price.
The option to set it to say Product Variation instead of Products is available. The reason why Product Variation is a good term is because there may be times where you have different pricing options, skus, etc for the same "product display".
For me, I have created an event/course registration system. Because each of my events may be offered in more than one location, I need to make sure the user registers and purchases the right one. I have only 1 Product Display being used because it the same event, but I add more than 1 "Product Variation", one for each location since they have different SKUs.
For some people it just makes more sense to call it that. It has nothing to do with HAVING to have a color or size, that is just an easy example of why calling it a Product Variation makes more sense to standard editors because they feel that a color is just a variant of a t-shirt, not an entirely different product.
I kinda went all over there but I hope that helps. There is also a bunch of documentation on here about it.