Taking aside the part that says which OS a particular filesystem is associated with, the main point is the word "journaled".
I include the following Wikipedia quote as there is no point re-inventing the wheel:
A journaling file system is a file system that keeps track of the
changes that will be made in a journal (usually a circular log in a
dedicated area of the file system) before committing them to the main
file system. In the event of a system crash or power failure, such
file systems are quicker to bring back online and less likely to
become corrupted.
Taking that to one logical end, an external drive is by definition more likely to be removed from the system than an internal drive. It's not possible to remove your laptop drive and keep the OS running, but perfectly possible with something USB or Firewire attached for example. As such you run a greater risk of changes that need to be written to the drive failing to complete should you remove the drive too quickly, or without following the correct eject procedures.
Particularly if you use any form of caching, the data may be waiting to be written to the disk at the point of removal, thus losing your data.
A journaled filesystem helps to prevent too much damage in these scenarios by keeping a log of all changes it needs to apply, and noting when they are successfully completed. In this way it can examine the log on a restart and work out of there are outstanding changes that were never completed. This is far faster than simply running a chkdsk or similar command to check the entire filesystem for problems which you would need to perform on a FAT32 file system.
In addition to the protective side of things discussed above, is the fact that a HFS filesystem has all the Mac OS X hooks built in for automated indexing, backup, version control and so on that would not be possible on a FAT32 enabled filesystem.
Best Answer
In Disk Utility, when choosing MS-DOS (FAT), the FAT version will be size appropriate. In other words, if creating a disk image of 1.4 MB it will be formatted FAT12, if 100 MB it will be FAT16 and in the case of your 8 GB Flash Drive it will be FAT32. The FAT (File Allocation Table) link in your question answers #2 however there is nothing to worry about as it's considerable larger then your Flash Drive.
The issue to be aware of is on a FAT32 volume the maximum possible size for a file on a FAT32 volume is 4 GiB minus 1 byte or 4,294,967,295 (232 − 1) bytes.