As is illustrated here, Unix is a multi layered system. In a strictly physical sense the kernel, shell, and utilities rest on the hardware. Logically the system is arranged as the diagram shows.
Although the words "operating system" are frequently used to refer to the kernel, shells, and the utilities or commands. Technically utilities are not part of the operating system. Utilities that come with the operating system are basic tools that have evolved into standard Unix commands. They make the operating system more immediately useful to the user, but only the kernel and the shell are truly the operating system.
For essential information on the function of an operating system please go to Basic Unix.
Each layer in the system can be thought of as a country with its own indigenous language. Hardware includes the physical parts of the system: monitor, mouse, printer, cables, chips, etc. The hardware layer and the user layer are monolingual. They can only talk to one other layer of the system. The hardware can converse with the kernel. The kernel is bilingual. It can talk to the hardware or to the shell. The shell is multi lingual and can talk to any part of the system with the exception of the hardware. The shell can be thought of as the master interpreter. It retrieves the file that holds instructions for every command that's typed in and it allows users to utilize the services of the kernel.
Unix utilities can converse with the shell and indirectly with the kernel. Utilities use functions called system calls to request services from the kernel. They cannot interact with the kernel directly.
Terms used:kernel, operating system, system call, shell, utilities.