1. The hardware and operating system for application programs, such as the Macintosh environment. In MS-DOS, the environment also is a space in memory reserved for storing variables that applications runnning on your system can use. From QUECID

2. A set of shell variables and their assigned values provided for each process that is called. The default environment for your terminal is stored in your home directory in a file called either .profile (Bourne or Korn shell) or .login (C shell). You can modify the environment by reassigning shell variables. From Linux Guide @FirstLinux