Before our first lecture today I assumed that installation was about the atmosphere that a work can create. I thought it differs to a sculpture in that a sculpture allows you to feel something in relation to an object whereas an installation allows you to feel something about a setting/space.

The lecture today made me realise that while these assumptions weren't wrong, they don't describe the full realm of installation. It seems to be a field with many definitions with none being completely correct and none being unquestionably incorrect.

Perhaps that is the point of installation. It can mean anything to anyone. If you as the artist call your work an installation piece then as the maker you should not be questioned.
http://moca.org/pc/viewArtTerm.php?id=18