A user's input into a system
The interaction with a system is giving input to it.
No matter which kind of solution (product, software or service) it is: They all offer opportunities for input. Every input a user makes is an interaction with the system.
Output from a system
The output of a system can also be considered as an interaction with it, even though the user is not doing something but can be seen as the consumer. A good interaction design consists of a proper distribution of input into a system and output from it.