Declaring variables in a function

Question

So I was looking at this example :
function addNumbers(a, b) {
var c = a+b;
return c;
}
document.write( addNumbers(40, 2) );
//Outputs 42

The example is simple, and it works. Although the logic is not very straightforward for my brain lol. So I wanted to try and modify this example. Here's what I came up with:

function addNumbers(a, b) {
var c = a+b;
}
addNumbers(40, 2);
document.write(c);

But this doesn't work. When I call upon the function, it doesn't actually store any value in my variable "c" as I intended.

So, I did more testing, and here's what I ended up with:

var c = 5; //This is only for testing the variable "c"
function addNumbers(a, b) {
var c = a+b;
alert ("the answer is " + c)
}
addNumbers(40, 2);
document.write(c);

The "alert" displays "42" as should be. When close the alert, I see my last line of code writing the output for "the other c", which is 5. So, if I understand correctly, variables declared inside a function only exist inside of that function, right? I find it really weird that two variables "c" could exist at the same time.