A thermodynamic system is a specific portion of matter or space that is being studied in thermodynamics, the branch of physics that deals with heat and energy transfer. This system can be isolated, closed, or open, depending on whether it exchanges energy or matter with its surroundings. The surroundings are everything outside the system that can interact with it. For example, in a steam engine, the steam inside the engine can be considered the thermodynamic system, while the environment includes the air and any other materials that affect the engine's performance.