Why should I use exFAT over NTFS on removable media?

exFAT basically takes the FAT file system to the next level, adding a large amount of long awaited features that the FAT32 system was sorely lacking. One of the key features for people doing video editing is the support for >4GiB files and much larger partition sizes than FAT32 typically supported, making it much easier to work with modern multi-terabyte drives..

exFAT is available for Windows Vista, 7, and I believe I may have even seen a Microsoft release to make XP work with exFAT. There are some people working on Linux exFAT support, but I can't tell how far along they are, and as always, there is a risk of corrupting your data just like with NTFS...

From Wikipedia (my comments in bold):

• Scalability to large disk sizes: 64 ZiB theoretical max, 512 TiB recommended max, raised from the 16 TiB limit of FAT32 partitions. Note that the built-in Windows 2000/XP/Vista/7 can mount and support FAT32 volumes larger than 32 GB, but cannot create a FAT32 volume larger than 32 GB.
• Cluster size up to 32 MiB (allowing for larger partitions at the cost of more file slack)
• File size limit of 16 EiB (Limited by volume size), raised from close to 4 GiB in FAT32 (Better support for video editing and large archives)
• Free space allocation and delete performance improved due to introduction of a free space bitmap (much better performance than FAT32)
• Support for access control lists (so you can control file access if you want but I suspect the main use would be for USB devices where you just want people to access it go figure...)
• Provision for OEM-definable parameters to customize the file system for specific device characteristics (for use in embedded devices with specific needs)

What Microsoft developers have basically done is update the FAT32 file system to exFAT, moving from 32-bit addressing to 64-bit addressing, to offer an improved speed alternative over moving to NTFS at the same time making it possible to create, store or transfer huge files, files greater than 4GiB. In theory, exFAT does not have as much of the operational overhead of NTFS as it lacks many features that add complexity (and therefore processing time and disk latency) to the filesystems.

Some of the missing (and effectively useless or a waste for removable media) features include:

• Alternate Data Streams
• File Compression
• Journaling

The only drawbacks to exFAT are that Microsoft has not released it into the public, requiring that companies licence it for use on their devices. This is likely more aimed at digital video recorder type devices, home users get a licence to use it with Windows.

From exFAT Versus FAT32 Versus NTFS

However, exFAT should be a true competitor to NTFS on systems with limited processing power and memory. NTFS on flash memory has been known to be inefficient for quite some time. exFAT’s smaller footprint/overhead makes it ideal for this purpose. Of course, only if your definition of “ideal” allows software to be proprietary and not open source.

One very important difference comes about if you use the EFS "Encrypted" attribute (EFS stands for Encrypting File System, which is not actually a file system, but rather a feature of NTFS).

Most of the time, EFS is transparent. You don't see it. Files are encrypted on the disk, but are automatically decrypted when you access them.

When you copy an encrypted file to another NTFS volume, it stays encrypted using the same key(s) the original was. This can be great, and this can also be incredibly annoying, depending on your use case.

Basically, if you want to take your files to another computer that has all the same decryption certificates installed, choose NTFS on the removable drive. Then your files stay encrypted in transit, yet are transparently accessible on all authorized computers. Neat-o!

However, if you usually take files to machines that don't have the decryption certificates, there is no way to tell Windows to automatically decrypt a file when it's copied to an external disk. If you forget to manually decrypt it, you won't be able to access it on the other machine. If you do this often, choose exFAT on the removable drive. Any files you copy to it will then get decrypted automatically, on the fly. Edit see comment, apparently this isn't true in Win10.

If you don't use EFS (like almost everybody, ever) then obviously this doesn't apply. I think this is the second biggest difference after "compatibility with other OSes".

As an addendum to the above answers, exFAT is also supported by OS X Snow Leopard in 10.6.5 and later (although not mentioned in the release notes).