Why is “size on disk” much bigger than “size” when I copy data from NTFS to exFAT

You should first understand what

Allocation Unit Size (AUS)

means.

It is the smallest data block on the disk. Your actual data will be separated into units of that size while saving to the disk. For example, if you have a file sized 512KB and you have 128KB allocation unit size, your file will be saved in 4 units in the disk (512KB/128KB).

If your file's size is 500KB and you have 128KB AUS, your file will still be saved in 4 units on the disk because as mentioned above 128KB is the smallest size of an allocation unit. 384KB will be allocated in 3 units, the remaining 116KB will be allocated in a final unit, and 12KB of that unit will be empty. You can observe this behaviour on the file properties dialog on Windows; what your file size is and how much space this file actually covers on the disk are two different concepts. The operating system reads only the allocation unit size worth of data at a low level disk read operation.

That being said, using a large AUS significantly reduces the free space utilization due to not using the last allocation unit completely. And as a side effect, the number of files to store on the disk is reduced due to same problem: the last AU not being used fully. But here's the trade-off: using a large AUS significantly improves the disk reading performance. The O.S. can read more data at one read. Imagine if the O.S. need to make only a couple of disk reads to completely read a GB sized file!

Using small AUS improves the free space utilization but reduces the disk read performance. Think using large AUS in reverse, same category problems and improvements, but in reverse...

So, what is the conclusion here? If you will store large (I mean large!) files on the disk, a higher AUS will give an appreciable read performance boost while reducing the file count and free space

Which AUS you should use? This depends on how much your average file size is. Also you can compute the free space utilization according to your file sizes.

tl;dr: This is space reserved for metadata storage.

This article about NTFS technical side will give you some more details, but most of this space is taken by the Master File Table. (Some space is also used for the boot sectors, and so on.)

What explains a good part of the "bloated" metadata in NTFS compared to, say, FAT32 is the need to store Access Control Lists - although there are more things in there.

How much space is used by the MFT?

There are 4 settings available when you format a hard disk in NTFS:

• Setting 1 reserves approximately 12.5 % of the volume. (Default)
• Setting 2 reserves approximately 25 %.
• Setting 3 reserves approximately 37.5 %.
• Setting 4 reserves approximately 50 %.

This is because the MFT size is proportional to your number of files. A standard (12.5 %) MFT size will be enough to provide metadata space for all your files if you fill the rest of your disk with 8 KB files. Of course, since some files are going to be much bigger, this is an average.

If you store a large number of smaller files to your disk, there won't be enough space to accommodate all their metadata in the reserved MFT space. This is not fatal, as a new MFT cluster will simply be created elsewhere. However, it will cause MFT data fragmentation, which is bad, as in, can cause severe performance degradation in some cases.