File system (also “filesystem”, one word) is the term used to refer to the specific technique that allows files to be laid out and located on a hard disk or other random access storage device.
At its most basic, a file system is nothing more than the specific format of the overhead information used to keep track of what data is stored where on a hard disk and the rules used to place and locate that data.
Since most hard disks and similar devices store data as files, then this is the “system” by which those “files” are placed on the media.
In addition to defining exactly what gets stored where, file systems also define what capabilities are present such as encryption, compression, the length of filenames, the maximum size of files and even whether or not file names can include both upper and lower case characters.
File systems may also include information relating to security and permissions, allowing the operating system to control who may or may not perform operations on the files themselves.
There are dozens, if not hundreds of different file systems, but the two most common in Windows-based computers are the FAT (File Allocation Table) file system and NTFS (New Technology File System).
The FAT file system predates Windows but is still commonly used on Windows-compatible memory cards used on mobile and small devices due to its comparative simplicity.
NTFS is the more common file system for hard disks due to its generally better performance, capacity and the ability to support important aspects of data security.