iPadOS 17/18 makes more use of available resources to boost system performance. While System Data is now a system storage category that is displayed in its own right, some internal storage has always been used by the system - even though it may have been less obvious.
Either way, understand that system storage is dynamically managed by iPadOS - its value will fluctuate over time - and space will be released as and when needed.
Consider that RAM is handled in much the same way, iPadOS using as much RAM as available to boost performance. Unused RAM is a wasted system resource.
Devices that are storage constrained, such base-model 64GB devices, will always be challenge if you intend to store significant volumes of data on your device. These devices are principally intended to be used with online/cloud resources where local storage is not needed.
iPadOS alone typically requires 10-12GB of your available 64GB just for the Operating System; installed Apps will consume yet more of your limited internal storage.