I can't find anything in the documenatation that tells me whether a USB boot disk for a Pi 4 has to be FAT formatted or not.
I know the SD card has to be FAT format but the 4 boots from eeprom so might be different.
The boot partition - where ever it is, SD or USB - has to be FAT formatted. The boot parititon is where the cmdline.txt, config.txt, kernel files, device tree files etc are.
Other partitions, such as the root partition where the operating system is should of course be formatted with a better format - usually ext4.
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