Chi literally means breathe or air. You should however not think of qi in its literal sense. If you do that you will seriously limit your undersanding of Chinese metaphysics. Instead for now, think it it as an invisible 'energy'.
So what really is chi? The ancient Chinese believe in the existence of an invisible life force or energy that permeates the universe. You cannot see it (like radio waves) but it exist in the environment, in things (matter) and in humans.
Let me quote an explaination by Zhang Dai a great scientist who lived during the Song Dynasty. This is what he said.
"The universe is a body of chi. Chi has both positive and negative qualities. When qi spreads out, it permeates all things; when it coalesces (spreads out) it becomes nebulous (gaseous or vague). When it settle into form it becomes matter. When it disintegrates it returns to its original state."
The explanation appear to imply that all things are a body of energy and that energy and matter are the same and the states are interchangeable.
Since all things are 'energies', the idea that one (the environment) can affect another (mankind) when brought in close proximity makes Feng Shui entirely plausible.
Positive Qi is known as Sheng Qi or Living Qi while Negative Qi is called Sha Qi or Killing Qi. In the practice of Feng Shui sheng chi can help improve wealth, heath, relationships etc while Shar chi may cause injury, accident, fire, lawsuit, illness and so on.
The whole idea of Feng Shui is to position, orientate and layout our homes and workplaces to accumulate and tap on Sheng (good) chi and avoid or minimize Shar (bad) chi.
(Chi Trivial: Qi is the hanyu pinyin version of Chi)