What is a constellation?
Short answer: A constellation is an area of the sky as seen from Earth.
Long answer: The meaning of the word constellation is a common source of confusion. People tend to think of a constellation as a group of stars that are physically located near each other in space, but this is not actually what it means. A constellation can be thought of as a group of stars that appear to be near each other as seen by us from Earth, but the stars are not necessarily near each other in reality.
When our ancient ancestors began identifying and naming constellations, they assumed that stars were arranged in something like a dome or sphere around Earth. To them, stars that appeared to be in a group were really in a group. It was only after modern astronomy was able to show the real distances to celestial objects that we were able to understand the actual positions of stars in the three-dimensional Universe. We now know that some stars are relatively close while others are very far away.
However, the system of using constellations is still useful. The important thing to understand is that constellations are not physical objects or groups of objects, they are a way of mapping the sky. Astronomers use constellations to explain where something appears in the sky from our point of view. For example, if you want to know where to look to see a certain planet, an astronomer could tell you to look in a certain constellation.
When we say a planet is "in" a constellation, we don't mean it is in a group of stars, we mean that it is in a particular direction from Earth.
The system of constellations, along with coordinates that astronomers use as well, is similar to the latitude and longitude lines on a map of Earth. These lines don't exist in reality, they're made up by humans to make map-reading easier.
The entire sky is divided into 88 constellations. They are based on traditional "shapes" from ancient astronomy but modern constellations have expanded and have boundaries between each other. There is no gap between constellations, so every single celestial object is within a constellation.
Note: Groups of stars that really are located near each other in space are called star clusters.