Windows – USB flash drive showing “disk not formatted” error

Some vendors (Sandisk comes to mind) make their flash drives appear to also be a CD-ROM, with "encryption" software or, in your case, some meaningless documentation. In the Disk Utility try removing/re-creating the entire partition table, then re-creating the FAT system. Some vendors make this even trickier where you need to visit their website and download a utility to remove this extra disk/partition and claim it as usable space in the main drive.

With the drive inserted, open a terminal screen and type mount [enter] if you see the disks listed as something like /dev/disk1s1 ... /dev/disk2s1 (differing disk#) then its a hardware/firmware issue with the drive itself, pointing the possibility of a utility from the manufacturer to consolidate it.
If you see /dev/disk1s1 ... /dev/disk1s2 (same disk#, differing s#) then the partitioning answers should have worked.

What is your brand/model USB flash drive?

This is normal. An "empty" NTFS filesystem has a number of internal files such as the master file table ("$MFT"), the log file used for filesystem recovery ("$LogFile"), the volume descriptor file ("$Volume"), and so on.

The largest one is probably the cluster allocation bitmap ("$Bitmap") that keeps track of what space is used and what space is free. This is pre-allocated when the filesystem is created.