Examined subject as a physical system

In physics, the word system has a technical meaning, namely, it is the portion of the physical universe chosen for analysis. Everything outside the system is known as the environment.

So Everything in the universe that is observable (including the universe itself) is technically part of one or another "physical system". The term is used to distinguish it from things like political systems and mathmatical systems.

The opposite to Physical System is conceptual system.

Examples: atom, the water in a lake , human body ..etc