Part 1 of 3
System Data technically, has a mount point /System/Volume/Data
With a mount point of /System , this Volume is part of the Operating System and can not be deleted - full stop
It is where your User Account was made when the computer was First Setup as New
We can point-out what may be included in this Volume
Though, how to reduce this is a long and complicated trial and error process
This process does not always prove fruitful
Follow the advise from @den.thed if doing this route
Part 2 of 3
The more popular way to address this issue is to Start Over from Scratch
For Apple Silicon computer >> Use Disk Utility to erase a Mac with Apple silicon.
For Apple Intel computers >> Use Disk Utility to erase an Intel-based Mac followed by How to reinstall macOS
Always make a Time Machine Backup before proceeding
It is also suggest to Only Migrating the User Account and nothing more.
Emphasis on User Account Only
Reinstall the Needed and not the Wanted applications from the Apple Apps Store or Directly from the Developers
Part 3 of 3
Generally when this type of issue is discovered by the User ( you in this case )
It is because the Internal Drive Capacity of this computer maybe on the small size
Meaning, the computer has a 256 GB Capacity Drive or possible the 512 GB Drive Capacity
Unfortunately, the users' needs for Storage may have grown since the time it was originally purchased
The implications being that, on your next purchase
Spend the Extra Money Up Front on a larger Drive Capacity Drive and add more RAM
This may just Future Proof the computer for your growing needs
Just saying, we get what we have paid for