How it works?

[wildOsprey]

Hi!
I am trying to understand SSD algorithm. Your implementation is the most understandable among all I've found. But still I have some questions and I hope you can help me with it.
The first question is: why do we need variances? As I understand, it is used to normalized coordinates. But why do we need normalization? For the better performance?

Also, what is the difference between location coordinates and priors coordinates?