What is an isolated system in capacitive circuit?

"Isolated system" means that charge cannot flow into or out of the plates in each dashed box.

That is, the sum of the charges on those plates inside a dashed box cannot change (and we can often assume, given proper initial starting conditions, that this charge sum is 0).

These boxes are nothing important just it is conservation of charges. By isolated they refer to a system where there is no net gain/loss of charge till establishment of equilibrium.