Most of the time, the data taking up space on your drive are your own data. If you need to free up space, the best approach is to move some of your data to an external drive or cloud storage. Do NOT install apps that purport to ‘clean’ or ‘optimize’ your Mac, in most cases they do far more harm than good. Essentially, System Data is a catch-all category for files on the Mac that are simply not categorized as something specific like Apps, Documents, TV, etc. For the most part, these files are created and saved by various apps on the Mac, often in the ~/Library folder. One example is MS Outlook attachments.
You can try the ‘nuclear option’: make a Time Machine backup, erase the Mac, reinstall macOS, transfer only the User account(s) in Setup Assistant, then reinstall only necessary apps.
How to reinstall macOS - Apple Support
Transfer to a new Mac with Migration Assistant - Apple Support