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Master File Table (MFT):
MFT size = 258.25 MB
MFT record count = 264447
MFT usage = 100%
Total MFT fragments = 2
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Every time the cluster size doubles the various file allocation tables and/or master file tables generally shrink by half, thus they take half the time to search.
It also means there are less units to keep track of, so file allocation will be faster.
It works in reverse too, if you use 512 byte clusters (one sector per cluster, until we move to 4KB sectors) then the file allocation tables, master file tables and allocation bitmaps will take up eight times the space (versus 4kb or 4096 byte allocation units).
Since NTFS handles files under 1kb in a special way, and folders too there is no point ever using clusters smaller than 2kb in any *possible* scenario.
Microsoft permitted 512 byte clusters so it was easier to code FAT16 and FAT32 to NTFS conversion utilities - there is no other technical or practical reason behind going smaller.
Tip: You may also want to read up on exFAT as it might suite your requirements better.