This Report explores recent advances in our understanding of the physics of open quantum systems (OQSs) which consist of some localized region that is coupled to an external environment. Examples of such systems may be found in numerous areas of physics including mesoscopic physics that provides the main focus of this review. We provide a detailed discussion of the behavior of OQSs in terms of the projection-operator formalism, according to which the system under study is considered to be comprised of a localized region ($Q$), embedded into a well-defined environment ($P$) of scattering wavefunctions (with $Q+P=1$). The $Q$ subspace must be treated using the concepts of non-Hermitian physics, and of particular interest here is: the capacity of the environment to mediate a coupling between the different states of $Q$; the role played by the presence of exceptional points (EPs) in the spectra of OQSs; the influence of EPs on the rigidity of the wavefunction phases, and; the ability of EPs to initiate a dynamical phase transition (DPT). DPTs occur when the quantum dynamics of the open system causes transitions between non-analytically connected states, as a function of some external control parameter. In addition to discussing experiments on mesoscopic quantum point contacts, we also review manifestations of DPTs in mesoscopic devices and other systems. Other possible manifestations of this phenomenon are presented. From these discussions a generic picture of OQSs emerges in which the environmentally-mediated coupling between different quantum states plays a critical role in governing the system behavior.
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