Why is System Data consuming so much disk space?

Just finished installing Applications on my new M1 MacBook Pro and noticed a huge chunk of disk space is being used by "System Data." Can someone explain what this is and why it would be consuming so much data? I looked at older threads addressing this issue but haven't really found any good answers. I've included the diskutil list if that might be helpful. Thanks!

~ % diskutil list internal

/dev/disk0 (internal):

   #:                       TYPE NAME                    SIZE       IDENTIFIER

   0:      GUID_partition_scheme                         1.0 TB     disk0

   1:             Apple_APFS_ISC ⁨⁩                        524.3 MB   disk0s1

   2:                 Apple_APFS ⁨Container disk3⁩         994.7 GB   disk0s2

   3:        Apple_APFS_Recovery ⁨⁩                        5.4 GB     disk0s3

/dev/disk3 (synthesized):

   #:                       TYPE NAME                    SIZE       IDENTIFIER

   0:      APFS Container Scheme -                      +994.7 GB   disk3

                                 Physical Store disk0s2

   1:                APFS Volume ⁨Macintosh HD⁩            15.4 GB    disk3s1

   2:              APFS Snapshot ⁨com.apple.os.update-...⁩ 15.4 GB    disk3s1s1

   3:                APFS Volume ⁨Preboot⁩                 557.6 MB   disk3s2

   4:                APFS Volume ⁨Recovery⁩                827.3 MB   disk3s3

   5:                APFS Volume ⁨Data⁩                    422.6 GB   disk3s5

   6:                APFS Volume ⁨VM⁩                      20.5 KB    disk3s6