From IFWiki

The simulated environment in which the game characters co-inhabit. On one level, the game world of interactive fiction is similar to the board upon which the tokens move in a conventional game, or the set that is built in a TV studio. But the world includes more than simulated objects; it includes the rules that describe how those objects interact. These rules may be a straightforward simulation built on the standard library that provides default responses to player actions, or the rules may include an extreme, surreal distortion of natural laws.

Game world is also commonly used to denote the fictional world in which the game is set - including not just those objects and behaviours simulated by the game, but also those which are merely stipulated, suggested or assumed by the game's text. In the first sense of game world, an NPC is a responsive but ultimately functional object; in the second sense he is a flesh-and-blood human being. Preservation of mimesis relies heavily on maintaining consistency between these two senses of game world.