What is SYSNAME data type in SQL Server?

Is there use case you can provide?

If you ever have the need for creating some dynamic sql it is appropriate to use sysname as data type for variables holding table names, column names and server names.

sysname is a built in datatype limited to 128 Unicode characters that, IIRC, is used primarily to store object names when creating scripts. Its value cannot be NULL

It is basically the same as using nvarchar(128) NOT NULL

EDIT

As mentioned by @Jim in the comments, I don't think there is really a business case where you would use sysname to be honest. It is mainly used by Microsoft when building the internal sys tables and stored procedures etc within SQL Server.

For example, by executing Exec sp_help 'sys.tables' you will see that the column name is defined as sysname this is because the value of this is actually an object in itself (a table)

I wouldn't worry too much about it.

It's also worth noting that for those people still using SQL Server 6.5 and lower (are there still people using it?) the built in type of sysname is the equivalent of varchar(30)

Documentation

sysname is defined with the documentation for nchar and nvarchar, in the remarks section:

sysname is a system-supplied user-defined data type that is functionally equivalent to nvarchar(128), except that it is not nullable. sysname is used to reference database object names.

To clarify the above remarks, by default sysname is defined as NOT NULL it is certainly possible to define it as nullable. It is also important to note that the exact definition can vary between instances of SQL Server.

Using Special Data Types

The sysname data type is used for table columns, variables, and stored procedure parameters that store object names. The exact definition of sysname is related to the rules for identifiers. Therefore, it can vary between instances of SQL Server. sysname is functionally the same as nvarchar(128) except that, by default, sysname is NOT NULL. In earlier versions of SQL Server, sysname is defined as varchar(30).

Some further information about sysname allowing or disallowing NULL values can be found here https://stackoverflow.com/a/52290792/300863

Just because it is the default (to be NOT NULL) does not guarantee that it will be!