A system is really a 3d chunk of space, Local Coordinates are used to represent a point inside a system, whereas Global Coordinates are used to designate a point outside a system.

Each Planet in a system occupies a unique spot on the x, y, and z axis. The system entrance is at local cordinates 0, 40, 10, providing a choke point for traffic from and to a system. A zone of influence extends from -200 to 200 along each axis. Vessels cannot travel beyond this zone once inside a system.

Also see Global Coordinates