FAT32 can even be used with larger sizes if you just format with a larger cluster size. Since each bundle/shard is 1MB minimum that is not a problem here.

File size is still limited to 0xffffffff (the dir entry only has 32 bits to store it). Some broken implementations even treat it as signed, and files over 2GB become problematic

Ah sorry, you're right. That allows FAT32 to be used for larger partition sizes, but the file size limit remains in place.