Well I do not think you are getting it right.
When you use string formatting you can build some nice things with them.
print("I like %s" % 'fish')
holder = ["I like %s"]
print(holder % 'fish')
Both of these will print out "I like fish", while they are both different in implementation both use the same principal of inserting in something, this something is called a variable. String formatting allows us to substitute specific keyword strings for our variable so we can change the output depending on what we need.
return raw_input("Enter a word!")
return "Hello, this is your word: %s" % word
using string formatting also allows you to do other fancy stuff,
file = raw_input("What do you want to name this file?")
with open("%s.txt" % file, "w+") as file_open:
There are tons of other things you can do with it that you will come into contact with latter so get excited!