Schema search_path and $user

In the docs, I see repeated references to $user in the postgresql.conf
schema search_path setting such as:

search_path = '"$user",public'

But I don't see any info on the meaning of '$user' here.  Is $user
some kind of variable within postgresql.conf that refers to the
current user?  Can it be replaced with a real group name to control
schema search_paths for specific groups/users?

Thanks.