Level two is the unit, which is made up of parts. Examples are motors, pumps, wiring panels, etc. Level three is the subsystem, which is an array of units. Examples include propulsion systems on naval destroyers and navigation sets in aircraft. Level four is the system itself, which is the summation of its subsystems.
Examples are aircraft carriers and space shuttles.
Incidents and accidents both begin with equipment failure or human error, but accidents continue on out of control with multiple, unanticipated failures in units and subsystems. Perrow's definitions can be confusing. A truck tire could blow, cause a wreck and kill a soldier. An extremely serious situation, but one he would categorize as an incident. Integral to his analysis are the concepts of interaction and coupling.