FAT32 was the next evolutionary step from FAT16. Bigger disks were needed, so FAT32 expanded the amount of space it could address once again. Also Microsoft was getting hassled by Apple and other operating systems about it's 8.3 charactor filenames so it added support for a file to have a long and a short filename. Filenames can be up to 256 charactors long, although the path can still only be 63 charactors long.

Everyone decided this was a kludge, it barely fixed any of the problems, and introduced new ones. It still had the notorious FAT, and still had it at the beginning of the disk1?. FAT32 had no permission models or anything. So, finally, Microsoft moved everyone over to using NTFS with Windows 2000.

1?: Had microsoft placed it at the middle of the disk, then it would have reduced the average amount of time taken to seek to it from either end of the disk from n to n/2, but nooo...