The discussion clarifies that a function defined as z=f(x,y) represents a two-dimensional surface in a three-dimensional space, where each point on the X-Y plane corresponds to a point on the surface through translation along the Z-axis. In contrast, a two-dimensional graph, such as y=f(x), maps x-values to a curve via translation along the Y-axis. The conversation also addresses the confusion between 2D and 3D graphs, emphasizing that surfaces are inherently three-dimensional objects. Additionally, it notes that while a function of three variables, f(x,y,z), can describe complex shapes, it does not create a surface with thickness. Overall, the distinction between dimensions in graphs and surfaces is key to understanding their representation.