Excluded volume refers to the volume that is not available for occupancy by other particles due to the physical presence of a given particle. In the context of statistical mechanics of real gases, excluded volume plays a significant role in understanding how gas particles interact and how these interactions affect the overall behavior of the gas, including its pressure and volume. This concept is particularly important when considering the deviations from ideal gas behavior, as it accounts for the space that gas molecules effectively 'exclude' from being occupied by other molecules.