What is the difference between an Adiabatic System and an Isolated System?
There are three ways a system can interact with its surroundings:

heat flow across the system boundary

work flow across the system boundary

a flow of matter across the system boundary


An adiabatic system is one for which there is no heat flow into or out of the system.
A closed system is one for which there is no flow of matter into or out of the system.
An isolated system does not interact with its surroundings at all, so there is no heat flow into or out of the system, no work done on or by the system, and no flow of matter into or out of the system.
Thus all isolated systems are adiabatic, but not all adibatic systems are isolated.  To put it another way, being adiabatic is a necessary but not sufficient condition for being isolated.
Also, your textbook is not quite correct in its language when it says:  &quot;This would not allow exchange of heat between the system and surrounding through its boundary and we call this type of system as adiabatic.&quot; [emphasis mine]   If you're a high school student using a high school textbook, this imprecision is understandable (they don't want to overly burden you with subtleties), so don't worry about it.
But, if you are interested in exploring the topic more deeply, read on:
Heat is not something that is exchanged between the system and surroundings.  Rather, it is thermal energy that is exchanged, and we call this exchange of thermal energy &quot;heat&quot;.
More specifically: If systems actually contained &quot;heat&quot;, then they could exchange heat with their surroundings.  But they don't.  Instead, what they contain (assuming $T &gt; 0\,\mathrm{K}$) is thermal energy.  It is this thermal energy that can (if the system is not adiabatic) be exchanged with its surroundings.  And we call this exchange of thermal energy, which manifests itself only during a change in the system, and appears only at the system boundary, &quot;heat&quot;.  I.e., heat is not a property of the system.  It is a property of the path through which a system undergoes change.
To give an analogy:  Thermal energy is like cars, and heat is like traffic.  Suppose cars are being moved from one parking lot to another along a connecting road.  The flow of cars from one parking lot to another is called traffic. The parking lots don't themselves contain traffic, nor are they exchanging traffic; they're exchanging cars.
This distinction between system properties (like internal energy) and path properties (heat and work) will become increasingly important if and when you continue your studies in thermodynamics.