How to reduce System Data size after using Arq Backup

I have a MacBook Air 15-inch, M3, 2024 running MacOS Tahoe 26.1.

I recently installed Arq Backup as I got sick of Time Machine backups failing for unknown reasons and forcing me to start all over again.

Arq seems to do a good job and doesn't fail but I noticed my Mac's System Data, under Settings > Storage, has grown from 90 GB to 462 GB since I started using Arq. This is out of my main 1 TB Macintosh HD drive.

Does anyone know how to reduce this to a manageable size? Or if there's a setting I need to tweak either on my Mac or on Arq? Arq Support told me to ask Apple as nobody knows exactly what they put in System Data.

Thanks in advance!