System containers are closer to Virtual machines than Application containers such as OCI containers. OCI containers are stateless and meant to run a single application, while system containers retain state and are designed to run multiple applications, just like a VM. Although they provide a similar experience to the one of VMs, system containers still use the same host kernel.
In Linux, the main tool for creating system containers is LXC. In FreeBSD, jails are the OS-native implementation of system containers.
References
Linux Container (LXC) Introduction
https://documentation.ubuntu.com/lxd/en/latest/explanation/instances/