FAT32 Definition 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 fil...