A fluid power system transmits energy via a liquid or gas that flows naturally or by force. The first type of fluid used was water, which is why liquid driven fluid power systems was named hydraulics. Today, hydraulics usually means a circuit using oil to transmit energy.
The other fluid commonly used in fluid power circuits is compressed air. Atmospheric air that is compressed seven to ten times flows easily through pipes, tubes, or hoses to transmit energy to do work and is renewable resource. Other gasses such as nitrogen or argon are also used, but they are expensive.

Both are forms of power transmission, which converts power to a usable form and distributes the power to where it is needed. Electrical, mechanical, and fluid power are all common methods of power transmission.
Should You Install a Pneumatic or Hydraulic System?
When deciding between using hydraulic or pneumatic cylinders, if you need to use an air cylinder with a bore four to five inches in diameter to meet the required force then you should choose hydraulics. Most pneumatic systems are under three horsepower because the air compression is not very efficient. A hydraulic system that requires 10 hp would use 30 to 50 horsepower in an air compressor system. Air circuits are less expensive to build because a dedicated prime mover is not necessary, but it costs more to operate. A large bore air cylinder could make sense if it were cycled one a few times a day or if used to hold tension and never cycled.