Microsoft's Xbox Series X and S external storage comes with specific requirements to launch games from external drives or USB sticks.

Finalized previews of the Xbox Series X confirm a few things about the console's storage options. The system's 1TB PCIe 4.0 SSD has 802GB of free usable space after OS and formatting, which is about enough to five 8 big AAA games. Any games installed on the SSD will be supercharged with faster loading even if they're not optimized, but any games with updates will benefit tremendously from the 2.4GB/sec storage upgrade.
What's interesting are the stipulations behind expandable media. We knew the Xbox Series X and S consoles require USB 3.0 external hard drives or USB sticks in order to launch games. You can't store games on a USB 2.0 drive, for example, and launch them from within the console. Now we know these drives must be at least 128GB in size, which eliminates a good portion of smaller USB thumb drives.

The drives also must be formatted specifically for Xbox consoles. Once a drive is formatted this way, it can't be used for anything else. Drives for sharable media have to be formatted to NTFS.
Here's a few other things we know about the Xbox Series X's PCIe 4.0 SSD: