In school they said it was a group of stars. B.V. Raman said a nakshatram is a constellation.
But in modern astronomy, the entire sky is divided into 88 constellations or areas of the sky. You can find nebulae also in them. Every celestial thing has to be in one constellation or another.
In olden days we had manđalā: like that. dhruva manđalam or the firm area, saptaŕşi manđalam or the area where you find ursa major and nakşatra manđalam where we have the 27 fixed areas of the zodiac belt. There may be more.