Docker compose files (and docker execs) use the following format

  volumes:
    - <host_storage_path>:<vm_mount_path>

If the docker-compose has a ${VAR_NAME}:/data, then it will replace it directly with the variable defined in the .env file in the same directory with the format

VAR_NAME=/path/on/host

And would mount the host’s /path/on/host to /data