The PEO model was first developed to describe the interaction between the person (P), the environment (E) and the occupation (O). The model helps guide clinical reasoning and is often used by occupational therapists when working with clients or patients. Components of the person include roles, interests, values, motor and sensory abilities. The environment is considered the context in which occupations are performed and is examined from each person's unique perspective. Occupations refer to everyday activities that people do to occupy time and bring purpose to their life. A goal of occupational therapy is to maximize the "fit" between the person, the environment and their occupations, which ideally will optimize occupational performance and minimize dysfunction.
Reference: Law, M., Cooper, B., Strong, S., Stewart, D., Rigby, P., & Letts, L. (1996). The person-environment-occupation model: A transactive approach to occupational performance. Canadian journal of occupational therapy, 63(1), 9-23.