Simple pagination element with dot separation when large counts

pagination.php

<div class="pagination size1of1 unit">
  <?php if($paged == 1): ?>
    <span class="current"><?php echo $paged ?></span>
  <?php else: ?>
    <a class="prev" href="?page=<?php echo ($current_page - 1) ?>">Prev</a>
    <?php if ($current_page > 2): ?>
      <a href="?page=1">1</a>
    <?php endif ?>
    <?php if ($current_page > 3): ?>
      <span class="dots">...</span>
    <?php endif ?>
  <?php endif ?>
  <?php if($current_page - 1 > 0): ?>
    <a href="?page=<?php echo $current_page - 1 ?>"><?php echo $current_page - 1 ?></a>
  <?php endif ?>
  <span class="current"><?php echo $current_page ?></span>
  <?php if ($current_page + 1 < $max_num_pages): ?>
    <a href="?page=<?php echo $current_page + 1 ?>"><?php echo $current_page + 1 ?></a>
  <?php endif ?>
  <?php if($current_page < $max_num_pages): ?>
    <?php if ($current_page < $max_num_pages - 2): ?>
      <span class="dots">...</span>
    <?php endif ?>
    <a href="?page=<?php echo $max_num_pages ?>"><?php echo $max_num_pages ?></a>
    <a class="next" href="?page=<?php echo ($current_page + 1) ?>">Next</a>
  <?php endif ?>
</div>

Do you mind if I ask you a question? I'm curious what is $paged variable on the second line for? the code works out great without that variable and that 'if' case. Thank you so much btw, this function helps me out a lot.

As @pimpattcha pointed out, it works well without the first if statement.
Thanks and you save the day