In attempting to apply the laws of Thermodynamics in such a way as to solve engineering problems, it is critical that we define exactly the region of space to which we are applying those rules.
The universe is all of space.
While the laws of thermodynamics could be applied to the universe, it is usually more convenient to break that space up into:
The system is the region of space that is of interest in the problem.
The surroundings is all of the space which is not contained within the system.
The system is enclosed by a boundary (that may be real or simply a "line"), so that the system can be open, closed, or isolated.
The system boundary may be real or hypothetical.
Distinguish between the universe, system, surroundings, and boundary