Modern control: State space equations
In modern control approaches, systems are analyzed in time domain as a set of differential equations. Higher order differential equations are decomposed into sets of first order equations of state variables that represent the system internally. This produces three sets of variables:
Input variables are stimuli given to the system. Denoted by $u$. Output variables are the result of the current system state and inputs. Denoted by $y$. State variables represent the internal state of a system which may be obscured in the output variables.
Classical control: Transfer functions
A transfer function relates the output of a system to its input when it is represented in the Laplace domain. An assumption is made that initial steady-state response is 0. If $Y(s)$ is the output of a system, $X(s)$ is the input, then the transfer function is:
$$ H(s) = \frac{Y(s)}{X(s)} $$
Example - A Car A car as a system: The input is the acceleration. The output is the total distance travelled.