Every degree of freedom or parameter of the system is represented as an axis of a multidimensional space. Time is not considered to be one of the dimensions but rather is allowed to flow letting the system (which is represented as a single point moving through the phase space) evolve. A phase space may contain very many dimensions, For instance a gas containing many molecules may require a separate dimension for each particle's x, y and z positions and velocities as well as any number of other properties.
See also Hamiltonian mechanics.