Outside of said firmware update or another special usage, you shouldn't *need* FAT16 anymore. Everything, including OS X, is geared to use FAT32, and for sharing general files, use it with Windows, Linux, Solaris, Haiku, or whatever you use. With gnu utilities on a Linux-based OS, this will be called 'vfat'. Use mkfs.vfat to format on there. On OS X, use diskutil combined with the Disk Utility. I'll explain all this in a bit, but first:
- FAT32 is the recommended choice. Every major system supports it, and it is very easy to use. Be aware there is no journaling, and files can go corrupt, and that there are limits (no files over 4 GB, as one example), so if you're looking
- As for exFAT, it is a second (more modern) option. Both FreeBSD and several flavors of Linux support it using FUSE, OS X supports it (I think from Lion on; maybe late Snow Leopard?), and everything past Vista SP1+ should support it. That said, it is a second option, though not as widely supported as FAT32/vfat is or was.
- NTFS is another option as Windows, most modern gnu/Linux systems, Solaris, Haiku, and others support it... but just be aware OS X does not like using NTFS without installing FUSE yourself.
- Or, if you don't mind the extra work... you could use HFS+ or ext3/4 with limitations, if you *really* prefer your Mac or penguin box over Windows for compatibility reasons, such as not wanting to lose permissions, etc. like you would on the other, non-*nix formats (HFS+ was originally from Mac OS 8, adapted for Mac OS X). Like NTFS on OS X, HFS+ volumes on gnu/Linux can be mounted, used, and setup (with hfstools), but they will be write protected by default. You can override that with the -rw option in mount. Windows with third-party tools supports HFS partitions as well. As for ext3/4, you will need FUSE on OS X, and Linux will of course support it natively. DiskInternals' free tool Linux Reader will allow you to browse ext partitions, but unlike with HFS+, don't expect to write to them.
And now, as for your final concern I promised to cover, Disk Utility did get rid of the archaic fat16 format as an option; as I first mentioned, mostly everything has evolved to vfat/32. But you do NOT need Windows to make a fat16 volume; it's just a bit harder here. Open Disk Utility, and ensure your flash drive has the MBR table, not GUID/gpt. Then, select the root of your drive (the top not indented), and click Get Info. Note /dev/disk3 for example. Now Unmount it (Cmd+U). You'll then need to open Terminal, and become root; use 'sudo -s' and type your password (no chars will appear; press return when done). Then, do: newfs_msdos -F 16 /dev/disk3s1, if your disk was "disk3" and your partition was "1". You may get warned; press q to quit. If the previous command does not work for you, try doing something like: diskutil partitiondisk /dev/disk3 1 MBRFormat "MS-DOS FAT16" "" 1G instead.
Otherwise, you can do sudo mkdosfs -F 16 /dev/sdb1, for example, if you have the tools for FAT installed on your gnu/Linux or BSD box, and that should do it.
