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FAT16 FAT16 was introduced with DOS Version 2. Technically, it supports up to 4 GB of hard drive space. Due to a bug in Microsofts FDISK, the tool used to create partitions, the limitation for Windows 95. 98 and ME is stated to be 2 Gigabytes. In addition, each cluster (a section of the File Allocation Table) grows larger as the size of each partition increases. This is important, as files are stored in groups of clusters much as if you might store speech notes on 3x5 index cards. Whether there is one word or 5 lines on an index card, it still takes an entire card (unless you break with convention and tear off the part of the card you are not using!). The same is true with clusters. You can store an entire (small) program for space it takes to store the word hello, because one entire cluster is used for each file. At the maximum size of 2 GB, each cluster becomes 64K. Since the cluster is the smallest area DOS can address (without additional software assistance), saving a 1 or 2 KB (Kilobyte) file wastes 62 to 63 KB of space. Storing a one-word file that contains the word hello wastes even more disk capacity. The good news about FAT 16 is that its disk partitions can be accessed by virtually every PC Operating System written. The less than stellar news about FAT16 beyond the limitations mentioned is reliability, or lack of it. For all these reasons, unless you have a specific need FAT16 should be avoided where possible. If you need FAT and use NTFS, choose FAT 32, it is a superior choice.
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