The system ID concept allows you to functionally create a new database without creating a new physical database. This allows you to have a test database or run a second company all within the same physical database ( i.e., a demo database and your own company's database).
If you set up two or more system IDs, you will have multiple databases. You also have the ability to share data across these system IDs.
System ID's are defined and maintained in System ID Maintenance.