The system is the part of the universe we wish to focus our attention on. In the world of chemistry, the system is the chemical reaction. For example:
2H2 + O2 ---> 2H2O
The system consists of those molecules which are reacting.
The surroundings are everything else; the rest of the universe. For example, say the above reaction is happening in gas phase; then the walls of the container are part of the surroundings.
In the ChemTeam classroom, I say to my students "You are the system (that is, the chemical reaction) and as you look outward, everything else are the surroundings.
There are two important issues:
1) a great majority of our studies will focus on the change in the amount of energy, not the absolute amount of energy in the system or the surroundings.Two possibilities exist concerning the flow of energy between system and surroundings:
2) regarding the direction of energy flow, we have a "sign convention."
1) The system can have energy added to it, which (obviously, I hope) increases its amount and lessens the energy amount in the surroundings.
2) The system can have energy removed from it, thereby lowering its amount and increasing the amount in the surroundings.
We will signify an increase in energy with a positive sign and a loss of energy with a negative sign.
Also, we will take the point-of-view from the system. Consequently:
1) When energy (heat or work) flow out of the system, the system decreases in its amount. This is assigned a negative sign and is called exothermic.
2) When energy (heat or work) flows into the system, the system increases its energy amount. This is assigned a positive sign and is called endothermic.
We do not discuss chemical reactions from the surrounding's point-of-view. Only from the system's.