That just means that of all the power used at that point, Android system used 65%. An example would be, if you had used up 10% of your battery, then Android system using up 65% means it used 65% of the 10% consumed, or equivalent to 6.5% of the total battery. Now obviously, Android system is the OS itself, so yes, it would naturally have a higher percentage of battery used when there's nothing else running.