What is the system that consists of nonproprietary hardware and software based on publicly known standards that allow third parties to create add-on products to plug into or interoperate with the system?

Open systems

Explanation:

Open systems are very different from Open Source applications or software, it should not be confused.

Open systems work with the blend of open software standards, portability, and interoperability. Computer systems that interoperate among multiple standards and vendors to ensure that computer resources (hardware and software) are not allotted to a particular vendor. Such computer systems are considered as open systems.

For instance, computer systems that run a Microsoft Windows OS can be considered as an Open system. This is because of their capability to run different versions of the Microsoft Windows OS on that particular computer system. More clearly, A computer with Windows 10 OS, can be used to install Windows 8 OS without any issue. That same computer system can run the Windows 7 OS. This makes the computer system and open system.