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Basically FAT32 and FAT16 (which I think is more commonly call "FAT") differ by the method of indexing the empty, formatted storage area. Since FAT32 has more slots or areas, each individual piece of the HDD is smaller. Generally speaking smaller area result in slightly more file storage.

For example if you have a 1 GB HDD and the smallest and the smallest storage area with FAT16 is 64K, then even a single letter of data takes 64K of HDD space. If you have FAT32, then the smallest area might be 4K or 2K -- I am too lazy to look up the numbers, but you get the idea.

I am not aware of FAT64, there is a NTFS file system. There also is yet another file system, the one used by Apple PCs, which I believe is better then FAT16, FAT 32 and maybe NTFS in terms of minimum file size.

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