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latent variable models

Please tell me what latent variable/latent variable model is and applications in machine learning. Thank a lot.
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When you never observe a variable but want to predict it from the context, it is called a latent variable.
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Latent Variable Modeling is having great use in Dimensionality Reduction. In a high dimensional data problem, if one wants to reduce the dimensionality of data set explaining nearly same amount of variance contained in the original data then some latent variables are chosen which are some linear or nonlinear functions of the original variables. This is also known as projection of the original data into some lower dimension space.

Latent Variable Modeling can be done by Principal Component Analysis, Factor Analysis, Partial Least Squares etc...
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