Correct, applies to the data then saved/stored on the card.
BUT, the actual act of formatting a device as NTFS consumes a lot more space than FAT32.
Mind you, that was in the days of floppys. Might have to read up a bit more before I comment any further =)
Anyways, with SD cards, I would stick with FAT32. If fact, with the Wii in general, I would stick to FAT32.
Edit: Just ran a simple test.
Formatted a 1GB (976MB) SD Card.
NTFS - 512Bytes Allocation Unit = 32.8MB Used, 943MB Free
FAT32 - 512Bytes Allocation Unit = 512Bytes Used, 960MB Free.
The space is consumed by the NTFS's use of mutiple MFT's etc.