System storage is dynamically managed by the iPad - not the user.
The iPad Air2 is operating at the absolute minimum system specification that can support iPadOS - 2GB RAM with an A8X CPU. To make matters worse, 16GB is the absolute lowest internal storage.
If your internal storage is full, your only option is to better manage the storage that you have - and delete unused Apps or unneeded data.
These support pages may prove to be helpful:
About storage on your device and in iCloud – Apple Support
What's the difference between device storage and iCloud storage? – Apple Support
Manage your iCloud storage – Apple Support
How to check the storage on your iPhone, iPad and iPod touch – Apple Support
Clear Other storage on your iPhone or iPad - Apple Support
“Offloading” Apps can be a helpful method of creating temporary space for a software update.
https://9to5mac.com/2020/01/21/how-to-offload-apps-in-ios-to-save-space-without-deleting-their-data/
Additional information about creating sufficient space for installation of a software update can be found here:
If you need more space for an update on your iPhone, iPad, or iPod touch - Apple Support
Updating your iPad using a PC or Mac computer can reduce the amount of free-space necessary to perform the update - as the initial download, unpacking and verification is performed on the computer prior to installation. However, even this method is not possible if your iPad has too little free space.