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The difference is that 'set' is also reporting shell-local variables. These look the same from the point of view of the shell user, but are not passed on to the new process if you run a command. When you use the 'export' command you promote a shell variable to be an environment variable.
Environment variables are a fundametal feature of Linux, while shell variables are just a feature of the shell. To fully understand how environment variables work you really need to appreciate the fork/exec process model. I would direct you to the mighty Rute for some explanation:
Thank you very much for the excellent explanation. And thank you also for the Rute link. I read the Rute book more than 4 years ago, and I completely forgot about it. Great book.
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