How to clear system data on an iPhone 7 32GB device?

Your iPhone 7 was introduced 9 years ago. It is far behind the times in terms of performance and storage. Fewer and fewer apps will be able to run on the iOS 15 system that your Phone 7 runs, and you cannot upgrade to a newer and better iOS version.

Frankly speaking......you need a new phone.

If you don't want to buy a new phone, all that you can do at this time to reduce the amount of space that System Data is using on your phone would be to do the following:

• Make a backup of your phone on iCloud, a Mac or PC
• Perform a Factory Default Reset to erase all of the data on your phone
• Set up the phone again using your backup to restore data back to the phone

This will not "clear" the System Data on your phone, but it will reduce the amount of space that it is using.

My opinion......I do not think that it will be worth anywhere near the time and effort to do this, since the gain will be minimal.

But, it's your call.

You cannot clear system date from your iPhone. That would render it unusable. But you can possibly free up space, by deleting apps, deleting old photos you no longer need, old emails & messages. You can read more about it here: How to check the storage on your iPhone and iPad - Apple Support

On the off-chance that you are possibly asking how to remove all of your personal data from the device (???) see the procedure here:

What to do before you sell, give away, or trade in your iPhone or iPad - Apple Support