Phase space is a mathematical framework that combines an object's position and velocity into a single diagram, allowing for the representation of a physical system's state as a coordinate within that space. It can encompass multiple variables, with a 2D scatter plot serving as a basic example. Liouville's Theorem is relevant, stating that the area in phase space is conserved as a system evolves, which is particularly applicable to ensembles of particles. While constructing a phase space typically involves independent parameters to minimize dimensions, it's noted that variables do not always need to be independent, especially in chaotic systems. Understanding these concepts is crucial for analyzing complex physical systems effectively.