When you standardize a variable, you transform it so that it becomes a z-score, That is, it's mean becomes 0 and its standard deviation becomes 1. This is useful if you will be combining variables that are on very different scales (e.g., score on the SAT, which has an average of 1000 and a maximum score of 1600, and GPA, which ranges from 0 to 4.0). If you took the simple arithmetic mean of SAT and GPA, your resulting score would be dominated by the SAT score because it is so much larger. To make each variable contribute equally to the mean, you can standardize them.
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