Update, creating a system.conf file in /etc/newsyslog.d made no difference.
# logfilename [owner:group] mode count size when flags [/pid_file] [sig_num]
/var/log/system.log 640 7 5120 * J
The syslogd(8) man page starts aslmanager "syslogd invokes aslmanager shortly after it starts up, at midnight local time if it is running"
As seen in the aslmanager log file, it rotates the system.log.
Sep 17 00:00:00: ----------------------------------------
Sep 17 00:00:00: Processing module com.apple.asl
Sep 17 00:00:00: Checking file /var/log/system.log
Sep 17 00:00:00: - Rename, move to destination directory, and compress as required
Sep 17 00:00:00: src files
Sep 17 00:00:00: system.log.T1663387200
Sep 17 00:00:00: dst files
Sep 17 00:00:00: system.log.6.gz
Sep 17 00:00:00: system.log.5.gz
Sep 17 00:00:00: system.log.4.gz
Sep 17 00:00:00: system.log.3.gz
Sep 17 00:00:00: system.log.2.gz
Sep 17 00:00:00: system.log.1.gz
Sep 17 00:00:00: system.log.0.gz
Sep 17 00:00:00: rename /var/log/system.log.6.gz ---> /var/log/system.log.7.gz
Sep 17 00:00:00: rename /var/log/system.log.5.gz ---> /var/log/system.log.6.gz
Sep 17 00:00:00: rename /var/log/system.log.4.gz ---> /var/log/system.log.5.gz
Sep 17 00:00:00: rename /var/log/system.log.3.gz ---> /var/log/system.log.4.gz
Sep 17 00:00:00: rename /var/log/system.log.2.gz ---> /var/log/system.log.3.gz
Sep 17 00:00:00: rename /var/log/system.log.1.gz ---> /var/log/system.log.2.gz
Sep 17 00:00:00: rename /var/log/system.log.0.gz ---> /var/log/system.log.1.gz
Sep 17 00:00:00: copy compress /var/log/system.log.T1663387200 ---> /var/log/system.log.0.gz
Sep 17 00:00:00: remove /var/log/system.log.T1663387200
Sep 17 00:00:00: - Check for expired files - TTL = 7 days
Sep 17 00:00:00: dst files
Sep 17 00:00:00: system.log.7.gz (age 7 days)
Sep 17 00:00:00: system.log.6.gz (age 5 days 23:59:59)
Sep 17 00:00:00: system.log.5.gz (age 4 days 23:59:58)
Sep 17 00:00:00: system.log.4.gz (age 3 days 23:59:58)
Sep 17 00:00:00: system.log.3.gz (age 3 days)
Sep 17 00:00:00: system.log.2.gz (age 2 days)
Sep 17 00:00:00: system.log.1.gz (age 1 day)
Sep 17 00:00:00: system.log.0.gz (age 0)
Sep 17 00:00:00: - Check total storage used - MAX = 52428800
Sep 17 00:00:00: dst files
Sep 17 00:00:00: system.log.7.gz size 1212
Sep 17 00:00:00: system.log.6.gz size 1521
Sep 17 00:00:00: system.log.5.gz size 1132
Sep 17 00:00:00: system.log.4.gz size 1217
Sep 17 00:00:00: system.log.3.gz size 42460
Sep 17 00:00:00: system.log.2.gz size 7716
Sep 17 00:00:00: system.log.1.gz size 4787
Sep 17 00:00:00: system.log.0.gz size 4281
Then :30 Minutes later it runs again. This type output is also seen when a system is booted (syslogd started) and this what I expect should be happening at midnight, rotate if file size is exceeded.
----------------------------------------
Sep 17 00:30:04: Processing module com.apple.asl
Sep 17 00:30:04: Checking file /var/log/system.log
Sep 17 00:30:04: - Rename, move to destination directory, and compress as required
Sep 17 00:30:04: ignore src file system.log since it is internal and syslogd will checkpoint it when it needs to be renamed
Sep 17 00:30:04: no src files
Sep 17 00:30:04: - Check for expired files - TTL = 7 days
Sep 17 00:30:04: dst files
Sep 17 00:30:04: system.log.7.gz (age 7 days 00:30:04 - expired)
Sep 17 00:30:04: system.log.6.gz (age 6 days 00:30:03)
Sep 17 00:30:04: system.log.5.gz (age 5 days 00:30:02)
Sep 17 00:30:04: system.log.4.gz (age 4 days 00:30:02)
Sep 17 00:30:04: system.log.3.gz (age 3 days 00:30:04)
Sep 17 00:30:04: system.log.2.gz (age 2 days 00:30:04)
Sep 17 00:30:04: system.log.1.gz (age 1 day 00:30:04)
Sep 17 00:30:04: system.log.0.gz (age 00:30:04)
Sep 17 00:30:04: remove /var/log/system.log.7.gz
Sep 17 00:30:04: - Check total storage used - MAX = 52428800
Sep 17 00:30:04: dst files
Sep 17 00:30:04: system.log.6.gz size 1521
Sep 17 00:30:04: system.log.5.gz size 1132
Sep 17 00:30:04: system.log.4.gz size 1217
Sep 17 00:30:04: system.log.3.gz size 42460
Sep 17 00:30:04: system.log.2.gz size 7716
Sep 17 00:30:04: system.log.1.gz size 4787
Sep 17 00:30:04: system.log.0.gz size 4281
So it appears if syslogd is running at midnight it rotates system.log?