System Data is taking all drive space in M1 Mac Studio after Sonoma is installed.

Try restarting in safe mode followed by a normal restart.

If you use Time Machine you can force TM to delete local snapshots by turning off TM in settings and after allowing it to finish deleting the snapshots turn it back on again.

If not done already it is good practice to shut the mac down on a regular basis

Running 3 different M2 / M1 Computers of which 2 have been upgraded from macOS 11 to macOS 12 to macOS 13 and now macOS 14

Those 2 machines have the Stock 256 GB SSD drives

The third M2 has the 500 GB SSD and moved from Ventura to Sonoma

Each of the 3 computers are only using about 34 GB of the 256 Drive capacity and the System Data 8.4 GB

So what I am saying is, 3 machines without this purported issue versus 1 machine .

Agree, something is not right on your machine.

You should not have to do this but it may or may not provide some insight on just where this issue is occurring.

Oh, and like you, also 20+ years on the Apple Eco-System and still learning more each day, usually lol

Download the Application Etrecheck directly from the Developer.

The Application is Not a " Silver Bullet "  and is  only a tool to examine the Hardware / Software used on this computer 

This is a Diagnostic Tool that makes no changes to the computer Hardware / Software used on this computer 

The application is free or paid from added features. 

The Report will Not Reveal Any Personal Information. 

Post back the Full Report - copy and paste - >>>> using the Additional Text Icon ( 3rd Icon to last ) <<<<

14.1 fixed the issue for me on all of my Macs that were affected!!

Also IMHO have something like the free application (just search for it) called Onyx just make sure you get the newest silicone version for the new operating system! I run its Maintenance section about once every 2-3 months to clear browser cache, rebuild databases and let the program reboot your Mac! This will keep clear in long run!

Here are some Apple tips on freeing up space:

Freeing up Drive Space

It is generally considered optimal to always keep at least 15% to 20% of the Total Drives’ Capacity to be kept as Empty Space, to allow the system to do its general housekeeping tasks. Allowing the computer to drop below these levels will eventually cause reduced or poor system performance.

The following links can assist in identifying what is taking up space on the Internal Drive and provide possible ways to remove data that is using excessive amounts of drive space. 

➡️  Rebuild the Spotlight index on your Mac

➡️  What is “Other” storage on a Mac, and how can I clean it out?

➡️  Free up storage space on your Mac

➡️  How to delete Time Machine snapshots on your Mac 

➡️  See used and available storage space on your Mac

Male sure you didn't leave the install media in Applications folders!

I have had this issue as well. I have done it several different ways on my M2 Air all with the same result, System Data fills 90% of the drive every single time on Ventura and Sonoma. Now it is happening on my 2019 iMac still on Monterey. The Apple service tech just advised me to turn off iCloud, I have used 2TB consistently for years and now use 6TB. My computers are practically unusable, I run several things that require me to have constant access to my computers, I am behind on EVERYTHING going on 2 weeks now. With every Apple computer being affected and dealing with things like court systems that do not wait for companies to fix software issues, it looks like I am being forced to switch away from Apple. It's unfortunate because this entire household has been exclusively Apple for over a decade and currently has 20 Apple devices that are in constant use every day. I can't even begin to tell you how many people and families I have gotten to switch to Apple but this is ridiculous and needs to be fixed now.

The same issue here. 2TB MacBook Pro M2 Max and all the free space (1.6 TB) is taken by "System Data". I have tried every single thing I found on the internet, at the end fully reinstalled macOS with Time Machine recovery and the issue still persists.

The MacBook is becoming unusable.

Worked for me too.