NTFS is a high-performance and self-healing file system proprietary to Windows XP 2000 NT, which supports file-level security, compression and auditing. It also supports large volumes and powerful storage solution such as RAID.
FAT32 is an extension to the FAT (File Allocation Table) that allows larger partitions than FAT16 while having a normal cluster size of 4096 bytes. Previously, you could have up to 64K clusters in FAT. This would make for very inefficient use of the disk on large hard drives.