Hey OP,
System Data is a catch-all category.
It includes things like temporary cache files, logs/crash reports, downloaded software updates that haven’t yet been installed, and other temporary things.
These files are usually deleted automatically when the system needs more space to save new content.
Unless your iPhone is showing error messages, I wouldn't worry too much about it.
Trying to clear iPhone system data manually could actually make your device work harder
(and perform slower while all those caches rebuild). So think twice if it’s worth the effort.
That said, if you really want to reduce system data on iPhone, the surefire way is:
- Make a full encrypted backup
- Erase all content and settings
- Restore from the backup
It's a bit of a process, but it’s the only reliable way to shrink System Data meaningfully.