iCloud Drive & System Data - Are downloaded iCloud files why my System Data storage is so high?

Hello,

I have about 250GB of 'System Data' showing on Storage on my MacBook.

Recently I opted to 'Download' a file worth 400GB from iCloud Drive on my MacBook. The rest of the files show on iCloud Drive on Finder but have the dotted cloud logo near them.

Is my System Data that high because I opted to download the 400GB file or is it due to something else?