Format a USB drive to FAT32 using Disk Utility (CLI)

First, look at the partition table:

~ $ diskutil list
/dev/disk0 (internal, physical):
   #:                       TYPE NAME                    SIZE       IDENTIFIER
   0:      GUID_partition_scheme                        *1.0 TB     disk0
   1:                        EFI EFI                     209.7 MB   disk0s1
   2:          Apple_CoreStorage Macintosh HD            999.7 GB   disk0s2
   3:                 Apple_Boot Recovery HD             650.0 MB   disk0s3
/dev/disk1 (internal, virtual):
   #:                       TYPE NAME                    SIZE       IDENTIFIER
   0:                  Apple_HFS Macintosh HD           +999.3 GB   disk1
                                 Logical Volume on disk0s2
                                 03C9C615-4A75-4F55-BFE2-3D1EFAD7519E
                                 Unlocked Encrypted
/dev/disk2 (external, physical):
   #:                       TYPE NAME                    SIZE       IDENTIFIER
   0:      GUID_partition_scheme                        *7.8 GB     disk2
   1:                        EFI EFI                     209.7 MB   disk2s1
   2:       Microsoft Basic Data NCS1002                 7.6 GB     disk2s2

In my case, the USB drive is /dev/disk2.

I want to reformat the device to an MBR-formatted FAT32 partition. To do that, run this command:

sudo diskutil eraseDisk FAT32 {NAME} MBRFormat /dev/disk2

where NAME is the name you want to give to the disk.

For example:

~ $ sudo diskutil eraseDisk FAT32 NCS1002 MBRFormat /dev/disk2
Password:
Started erase on disk2
Unmounting disk
Creating the partition map
Waiting for the disks to reappear
Formatting disk2s1 as MS-DOS (FAT32) with name NCS1002
512 bytes per physical sector
/dev/rdisk2s1: 15210832 sectors in 1901354 FAT32 clusters (4096 bytes/cluster)
bps=512 spc=8 res=32 nft=2 mid=0xf8 spt=32 hds=255 hid=2 drv=0x80 bsec=15240574 bspf=14855 rdcl=2 infs=1 bkbs=6
Mounting disk
Finished erase on disk2

Verify the partition table again:

~ $ diskutil list
/dev/disk0 (internal, physical):
   #:                       TYPE NAME                    SIZE       IDENTIFIER
   0:      GUID_partition_scheme                        *1.0 TB     disk0
   1:                        EFI EFI                     209.7 MB   disk0s1
   2:          Apple_CoreStorage Macintosh HD            999.7 GB   disk0s2
   3:                 Apple_Boot Recovery HD             650.0 MB   disk0s3
/dev/disk1 (internal, virtual):
   #:                       TYPE NAME                    SIZE       IDENTIFIER
   0:                  Apple_HFS Macintosh HD           +999.3 GB   disk1
                                 Logical Volume on disk0s2
                                 03C9C615-4A75-4F55-BFE2-3D1EFAD7519E
                                 Unlocked Encrypted
/dev/disk2 (external, physical):
   #:                       TYPE NAME                    SIZE       IDENTIFIER
   0:     FDisk_partition_scheme                        *7.8 GB     disk2
   1:                 DOS_FAT_32 NCS1002                 7.8 GB     disk2s1