Let's perhaps be more precise about what's going on. The phone's internal storage is divided into a number of partitions. The space that's available for your apps and data is the /data partition ("/sdcard", also known as "/sdcard0" and "/storage/emulated/0" is mapped onto the same space - this is done for historical reasons). The system applications, user interface etc (ROM) live in the /system partition, the kernel of the OS (much smaller) lives in the /boot partition, and then there are other spaces for lower-level firmware. In addition there is a system cache partition. The sizes of all of these partitions are fixed.
So the short answer to "how far will Android expand" is "it won't". The OS lives within its partitions, full stop. Actually those partitions will be partially empty, to allow for later updates being larger, so how much space is available to you (/data) depends on how much headroom LG have allowed themselves in the /system partition, how big they've made the system cache partition, etc. Without root you can't see what's in those partitions, and you can't use the space anyway, so your storage menu is reporting the whole of these system partitions, whether used or not, as being used by "System Data" (there may be other stuff it includes in that category, but most of that will be the partition sizes).
For people commenting on the partition sizes, does the V20 support the "seamless updates" that the Pixels have? If so that requires dual system partitions, which would by definition require more space.
However, while the OS doesn't actually expand the /data partition will fill up as you use the phone. Every app you install goes there. All app data go there, both for your apps and for system apps (the data are not part of the operating system), app caches (which are different from the system cache) go there. And app updates from the Play Store go there, even when they are updates to the system apps (though when these are updated as part of a system update those updates go to the /system partition). So yeah, space will decrease with use, but it's not actually android taking up more space. But if you put media on a removable card I doubt it will be a problem unless you go really overboard with installing large games. Caches are temporary, they don't grow indefinitely.
As for partitioning an SD card to use part as internal and part as external, not without root it's not possible. I used to do that sort of things back when phones had really limited internal storage (try 147 MB for /data rather than 50 GB!), but would not do it myself unless absolutely forced to.
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