System domain is not a technical term but a name used by 1&1 IONOS. A system domain is a subdomain that every customer automatically receives with their order - regardless of whether they register a domain or not - that is generally used to test websites or applications.
You can recognize a system domain by the domain name: They typically start with a small "s" (depending on the product), a series of numbers, and then the main domain.
Examples of a system domain:
s123456789.online-home.us or s123456789.initial-website.com.
It's not possible to change, move, or delete this subdomain.