FAT16 is a file system format that was introduced in the 1980s, primarily used in early versions of Microsoft operating systems. It stands for "File Allocation Table with 16-bit addressing," which means it can manage files on storage devices using 16 bits to identify clusters. This allows for a maximum volume size of 2 GB and supports file sizes up to 2 GB as well. Due to its simplicity and low overhead, FAT16 was widely adopted for floppy disks and early hard drives. However, as storage capacities increased, it became less efficient compared to newer file systems like FAT32 and NTFS, which offer better performance and larger file support.