Think of it as putting an imaginary box around what you want to study. Everything inside the box is the "system," and everything outside is the "surroundings."
A thermodynamic system is a well-defined macroscopic region of the universe that is selected for study. It consists of a specific quantity of matter with a distinct boundary (either real or imaginary) that separates it from its surroundings. A system can interact with its surroundings by exchanging energy (in the form of heat and work) and/or matter.