Thus God made the firmament, and divided the waters which were under the firmament from the waters which were above the firmament; and it was so. (GENESIS 1:7)
God created water on Day One of the Creation Week. On the Second Day of creation, God separated the waters by placing an expanse or firmament between these waters. God basically took the water and made some go up and some go down, so that the waters were above and below. Then the waters below were gathered into one place and God called them “seas” on day 3. God called this expanse between the waters “heaven,” though sometimes this is translated as “sky.”
It is basically what is above the earth. This would include our atmosphere (inner space) and outer space. It’s what you see when you stand outside and look up. There is no doubt that the first clouds (which are droplets of water, not vapor) were made during this expanse. The expanse extends far into space, though we don’t know how far it really was. God made the sun, moon, and stars in the expanse on Day Four GENESIS 1:17. The universe would have to be really big in order to hold all the stars that are out there.