During the era of small-capacity USB drives, we usually choose the FAT32 format for formatting. By default, this format is only suitable for storage devices up to 32GB. If your USB drive is 64GB, you can only choose NTFS or exFAT format for formatting.
However, theoretically, FAT32 can support storage capacities of up to 16TB. So why does Windows have a 32GB limit? The reason is simple: Microsoft engineers decided to limit it to 32GB when developing Windows NT. At that time, this capacity was considered more than sufficient (as storage card capacities were usually 16MB).
When formatting partitions larger than 32GB in FAT32, you need to use a 32KB or larger allocation unit. This leads to a problem: even a file with just one byte of content will occupy 32KB or more space. This method was very wasteful back then.
Over the years, Microsoft has not made any changes to this limitation. However, after more than twenty years, Microsoft has finally decided to increase the FAT32 capacity limit from 32GB to 2TB.
This means that if you are using a USB drive or external hard drive with a capacity of up to 2TB, you can format it as FAT32. In reality, it is recommended to use the NTFS file system for larger capacities to achieve better performance.
Microsoft did not explain in their blog why they decided to adjust this setting. However, it is highly likely that this adjustment was made in response to user feedback. For Microsoft, as long as the old code works, there is no need for major changes. Otherwise, if there are mistakes that affect usability, it would be a big problem.