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This paper introduces Distinction as the first structural requirement within the Paton System framework. Before system states can form, interact, or be evaluated for persistence, a boundary must exist that separates a system from its surroundings. This boundary establishes the minimal condition for system identity. The paper formalises distinction as the structural origin of system membership and positions it as the layer preceding constrained flow and admissibility evaluation. Across physical, biological, computational, and formal systems, boundary formation provides the minimal requirement that allows structured configurations to emerge. Without distinction, no system exists to evaluate, and no admissibility conditions can apply. The Distinction layer therefore constitutes the first structural step in the Paton System’s hierarchical framework for system formation and continuation.