Extended FAT (exFAT) file system is a new file system supported by Windows Vista and Windows Server 2008. The exFAT file system is intended mainly for removable flash media such as USB flash drives. Such media typically use either FAT or FAT32 as their file system, but these file systems have several limitations. For example, FAT32 has a maximum file size of 4 GB, and the Windows format restricts the maximum FAT32 volume size to 32 GB. FAT is even more restrictive on file and volume size. To overcome these limitations, Microsoft created exFAT, which can support files up to 2^64 bytes in size and can handle more than 1000 files in a single directory.
You can use the Format command on Windows Vista and Windows Server 2008 to format removable flash media using exFAT. For example, if K: is a USB flash device plugged into your computer, you can type format k: /fs:exfat to format the device using exFAT.
For more information on managing the File and Print Services roles on Server Core, see my book Windows Server 2008 Server Core Administrator's Pocket Consultant from Microsoft Press.