FAT32 limitations

The outermost limits of size is 8 Terabytes, though 2 Terabytes is the common size mentioned for less extreme settings. MS has info on the limits.

BUT there otherwise are some practical limits.

File Size
First, is that the largest file you can create on such a drive is 4GB. Therefore this can be problematic for backups and images. Use an NTFS drive for large files, or use some process which splits the files before the 4GB size is hit.

Formatting
The size of the FATS tables get tremendously big and perhaps 40% of your drive would be "wasted."

In Windows2000 or higher, Microsoft formatting tools will not create partitions higher than 32Gb.

Older motherboards ran into limitations due to Bios contraints and often had a limit of 127GB (sometimes seen as 137G). More info and help about LBA.

Fat32 Advantages, Etc.
The big advantage of FAT32 is, for an external drive, that the drive can be shared or read by both PC and MAC systems. Also to note, file copying to a FAT32 drive from NTFS removes security settings from the file.