This strange term refers to the way Windows stores data on your hard drive. "FAT" stands for "File Allocation Table," which keeps track of all your files and helps the computer locate them on the disk. Even if a file gets fragmented (split up into various areas on the disk), the file allocation table still can keep track of it. FAT32 is an improvement to the original FAT system, since it uses more bits to identify each cluster on the disk. This helps the computer locate files easier and allows for smaller clusters, which improves the efficiency of your hard disk. FAT32 supports up to 2 terabytes of hard disk storage. Unless you are a serious power user, that should be more than enough space for you.
This page contains a technical definition of FAT32. It explains in computing terminology what FAT32 means and is one of many software terms in the TechTerms dictionary.
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