While interviewing, some companies will be oriented more on the architecture part, while others focus more on the DS&A optimisations. Coming back to Step 1, it's important to understand what are the expectations of your interviewer and try to deliver based on them.
Keeping that in mind, try to start with a simple solution, the first one that you manage to come up with. Usually, while explaining out loud your solution, subconsciously, some neural connections are made and you might find optimisations down the line. Having a point to start, you can iterate and improve your solution.
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Some insights regarding the Design System Interviews. This article covers how to approach an interview of this type.
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