This discussion may help iPhone System taking up storage space
It talks about ”System” size and how to reduce, as to what it is, I believe it’s an area the OS uses to maintain performance (caches ect) but others may give you a more detail explanation.
I‘ve read that if you simply connect your device to a computer and open iTunes (you don’t have to sync) and wait a few minutes, system size may reduce, again I don’t know why but might be worth a try. I connect my X and iPad Mini 2 to the iMac daily and there system sizes are 7.52Gb and 5.45Gb respectively.