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    Files are stored on the disk in what is called called clusters (a group of disk sectors). Size on disk refers to the amount of cluster allocation a file is taking up, compared to file size which is an actual byte count.

    The lowest cluster size for FAT32 is 1, so if the actual file only needs a small portion of the cluster, the size on disk for that file will reflect the entire cluster as being used. This is why when you check the properties tab of a file (using Microsoft Windows), you will usually see the size on disk size is larger than the file size.

    size vs size on disk
    Image: File size vs. size on disk.

    Also see related terms cluster and file.

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