Clusters segment the sectors for data use and are what hold the data on all hard drives. Smaller clusters use less of the disk space when adding or moving around files, say, if one file is 5032 KB in size and your cluster size is 4096 the one file will use two clusters (8092 total), wasting space. Cluster sizes of 256 would only take 5032 total, allowing more free-space on the disk as utilization is more efficient.
exFAT vs NTFS – 1TB External Drive Re-Format: Speed and Allocation Unit Size | Black Raven Films