There's a big reason for making it common-computer-readable: on Windows, the default behavior if it doesn't understand the file system is to recommend a format. That's not a good thing.
Making it readable in all computers means that users won't accidentally format their storage, and they will also be able to easily move files to another card (e.g. when upgrading to a larger size, for example) without needing to juggle the files back and forth using the system's limited internal memory.
If they are going fat32 for microsd, they would be limiting games to 4GB... so if that is the case, you wouldn't need anything bigger than 256GB, let alone 128GB.
EDIT:
128GB and 4GB/Game would mean 32 digital games at most
256GB and 4GB/Game would mean 64 digital games at most
That's actually not true. FAT32 only limits the size of a single file to 4GB (also mentioned by darkten, in the quote below).
There's no reason a game could not be split up into multiple files of <= 4GB. In fact, this is what the 3DS already does, if I am not mistaken.
So many assumptions! Fat32 vs exfat - what if it is some completely different thing entirely? For all you know, once the thing is put into a Switch and formatted...it may not be readable on a computer at all due to some filesystem they invented...or the notion that because the size of a *single file* on a msdos-formatted volume...that this is a limiting factor in *any way*?
The constraints of people's imagination/knowledge of possibilities is pretty interesting. None of what has been posted here in any way has anything to do with the "maximum size of a game" at all. Mis-applied knowledge
This. Exactly this. So many options.
Something EXT or BTRFS based would be cool, but of course it'll be something all machines can read (see above), so FAT32 does seem a given, sadly. Not that that is a limitation in any way. (NTFS has issues on Mac, exFAT and FAT32 are similar enough that it doesn't really matter, and Windows can't read anything besides NTFS and FAT-based file systems I believe - but I haven't kept up with them the last few years so I'm not 100% on that last one...).
...Yeah...this is actually thing I am most "worried about for Nintendo" if anything - those "bargain" cards are often erm, well, clones, counterfeits or units with "greater than good" defect rates....or really slow (for this use case) and folks scraping for the bargain on say Amazon are gonna put these things in their consoles and "blame Nintendo"...who, would be in a catch-22 if they had some level of quality requirement/insisted on say, minimum spec being SDXC U3/√30...because they would be "forcing" people to buy better cards, etc.
But hey, everything comes on a cart, right, so...I mean...yeah
Actually, the price reduction I was talking about was for "real" Samsung/Sandisk/Kingston cards, from reputable stores.
Yeah, fake cards is a problem if you order from shady sources - but that is hardly Nintendo's fault I think. Everyone using extendable storage has that problem, not just them.