SYS files hold palette and sprite data for the game logo displayed in the CDZ menu screen. There's one file for each nationality:
Palettes are stored first, there's space for 45 of them ($5A0 bytes). Following that are 45 sprite tiles in the regular SPR file format, making a 9*5 tiles (144*80 pixels) logo. Tiles are mapped from left to right, top to bottom.
(See cdrom_load_title in cdrom.c of NEOCD 0.31).
TITLE_*.SYS file is loaded into memory at $127800 and takes up $1C20 bytes ($5A0 45 palettes + $1680 45 sprite tiles)