“System Data” is an amalgam of files that don’t easily fall into the defined categories of “Audio" “Movies” “Photos” “Apps” and “Backups”.
You can’t directly manage the contents of this category. That is done by macOS. The category varies in size depending on the current state of your Mac.
What you can do…
• Empty the Trash in the Dock.
• Empty the trash in the Photos app.
• Delete unused and unneeded application installers from your downloads folder and desktop.
• Reboot your Mac at least weekly.
• Transfer files that you don’t use daily to an external drive and then delete them from the startup drive and empty the trash. Files that take up the most room are movies, images and music.
This from Apple on the subject of freeing up space:
Free up storage space on Mac - Apple Support
Also, please see the following guidance from Apple:
Find and delete files on your Mac - Apple Support
You can also use apps such as DaisyDisk from Software Ambience or OmniDiskSweeper from Omni Labs to find large files on your drive. Once you've located these larger user files, you can relocate them to another drive and/or delete them if they aren't needed.