How it works...

Contextual filters mimic the route variables found in the Drupal routing system. Variables are represented by percentage signs as placeholders in the view's path. Views will match up each placeholder with contextual filters by order of their placement. This allows you to have multiple contextual filters; you just need to ensure that they are ordered properly.

The Views module is aware of how to handle the placeholder because the type of data is selected when you add the filter. Once the contextual filter is added, there are extra options available for handling the route variable.