Key requirements for effective system design include meeting performance parameters, staying within budget, and adhering to timelines. Characteristics of a good design emphasize minimalism, as fewer components reduce potential failure points. The discussion highlights the importance of integrating multiple functions into single components to enhance reliability and efficiency. Practical examples illustrate how combining functions, such as incorporating cooling systems directly into water pathways, can streamline design. Overall, a successful system design prioritizes simplicity and functionality to achieve optimal performance.