What is the significance of varchar255?

Varchar(255) is what happens in your database when you let someone who doesn't know what they are doing touch it.  For example, you let a business user import an .xls spreadsheet as a table "for reporting purposes". Most likely it is named [Sheet1$].

But now you're asking:

Why does that import functionality exist then?

Listen carefully. It's only for the use of trained professionals who understand field mapping and datatypes. This is not you.