In thermodynamics, we follow energy flowing from one place to another during chemical or physical changes. To be able to quantify these changes rigorously it is important for us to define what specifically is changing. To accomplish this we pick a specific part of the world that we are interested in and we call it the system. Everything else is the surroundings. The combination of the system and the surroundings is defined as the universe.
system + surroundings = universe
There are three types of systems that we study in thermodynamics. They are all distinguishable by whether matter and energy are exchanged between the system and the surroundings. An open system is a system that allows both energy (heat flow and work) and matter to freely exchange with the surroundings. A closed system is one that only allows for energy to exchange with the surroundings while keeping the matter contained. The most restrictive system is an isolated system. An isolated system contains both energy and matter within the system. Nothing is exchanged with the surroundings.
Chemists are usually focused on the system and its associated changes. For example, suppose we wanted to understand the energy change of ice melting in a glass at room temperature. Let's imagine that for this process the ice is initially at temperature of 0°C and then melts and the ending liquid water is 25°C.
\[{\rm H_2O(s) \rightarrow H_2O(l)}\]
In this example, the system would be the water. We would also need to describe the state of the system. The state is the set of properties that describe the system. Here, the initial state of the system is that a given amount of water is solid (ice) at a pressure of 1 atm with a temperature of 0°C. The final state is that the water is now a liquid at a pressure of 1 atm with a temperature of 25°C. The energy change associated with this physical change will depend on the initial and final states. The amount of energy change will vary depending on the amount of ice/water, the initial temperature of the ice and the final temperature of the water. Therefore we need to give more details for this change rather than just saying the change is ice melting.
The same is true for chemical changes. Let's try and understand how much energy flows out of a typical combustion reaction. Below is the combustion reaction for methane, which is the principle component of natural gas:
\[{\rm CH_4(g) + 2O_2(g) \rightarrow CO_2(g) + 2H_2O(g)}\]
For this example, the system would be comprised of all the matter in the reaction (both reactants and products) and the associated energy that is released during the reaction. This is all the stuff in the reaction. Initially, the system would be the methane and the oxygen (at a particular temperature and pressure). At the end of the reaction, the system would be the carbon dioxide and the water (at a particular temperature and pressure). If the reaction didn't go to completion, the system would be a mixture of reactants and products (at a particular temperature and pressure).
For both of these examples we can easily identify the initial state of the system and the final state of the system. In each example, the energy of the system would change in going from the initial to the final state. This is because energy is exchanged between the system and the surroundings. This is an example of a closed system. A closed system exchanges only energy (not matter) with the surroundings.
In our first example, the system is the water and the surroundings would be the room. The energy for melting the ice came from the room. Normally, we assume that the surroundings (the room) are at a constant temperature of 25°C and a constant pressure of 1 atm.
How does it keep these constant? It doesn't matter. The fact that the room is held at a constant temperature by the air conditioner in the room is not relevant. This is because we are interested in the system, not the surroundings. The definition of system and surroundings is our choice. We choose the system to examine what we are interested in. It is important to define these carefully since the energy flow will be different depending on our definition.