The WinSxS folder is the Component store located in your C:\Windows directory where core Windows files reside including the bits needed to turn on and off any Windows features you enable from the Control Panel. Not only are these files critical to the operation of Windows but when updates to Windows are installed, these files get updated.
However, there is an issue which was introduced in Windows Vista - that every time you receive updates for the OS, the WinSxS folder dramatically grows in size. A commonly asked question by many people using modern versions of Windows is "Why is the WinSxS folder so big?" There was no real solution to reduce the size of this folder on Windows 7 and Vista and delete older superseded update files until now. Windows 8 and above shipped with built-in options to clean up the updates cache and WinSxS, but Windows 7 and Vista users were out of luck. That changes today.
The good news is that there is an official way now to reduce the WinSxS directory size available for all Windows 7 users. Microsoft has released an awesome update. It improves WIndows 7 and brings the ability to clean up the WinSxS folder in the same way Windows 8 does it.
After you install this update, run the Disk Cleanup tool for your system drive. The fastest way for me to run it is press Win+R keys on the keyboard and type cleanmgr. Press Enter, and the "Disk Cleanup" window will appear.
Check it and press OK to clean your WinSxS folder.
The amount of disk space you can reclaim will vary depending on the number of updates you have installed. I was able to free 1.5-2 GB of disk space. You have to remember however that after performing this cleanup, you will not be able to uninstall any of the updates currently installed.
Note: If you plan to use the Windows Updates OS feature to get this update, pay attention to the "recommended updates" category. Microsoft has categorized it as "recommended" update, because it does not fix a bug or critical issue. Otherwise you can head straight to this page and download the update for your edition of Windows 7 with SP1.