Any component that needs to be managed in order to deliver an IT service. CIs typically include IT services, hardware, software, buildings, people, and formal documentation such as process documentation and Service Level Agreements (SLAs).
If you don't know what you have, you can't manage it. CIs are the atoms of IT management; tracking them is essential for incident resolution, change impact analysis, and cost management.
The art of Configuration Management is choosing the right granularity. Track too little, and you have blind spots. Track too much (e.g., every mouse and keyboard), and you drown in data maintenance. We focus on Service-Critical CIs—if it breaks the service, track it. If not, ignore it.