Yes, go to product attributes management, create an attribute of necessary type (e.g. Select), add the options you need. Make sure to add the newly created attribute to the product family to make it available on the edit and view screens.
The product variants grid will show only the products that belong to the same product family and have some value set for all configurable attributes.
You add variants to the current product by selecting them in the product variants grid.
At this time (1.0.0) the only pricing strategy that is included out of the box is defining the price by the variant price (e.g. on the fronted, when a customer selects Color: Red, and Size:Small for a T-Shirt, the price will be taken from the product variant with that specific combination of configurable attribute values).
Additional pricing strategies (e.g. defining surcharges per option value) and product variant generation (e.g. generate variants for all missing attribute combinations) will be available in the next release.