FAT12 (a variety of FAT, which stands for File Allocation Table) is a simple filesystem with limited capabilities. The "12" refers to the number of bits in table entries. It was adapted from an earlier 8-bit FAT version by Tim Paterson of Seattle Computer Products, and it became the filesystem behind the floppy disks used by what eventually became MS-DOS and PC-DOS when it was purchased by Microsoft and in turn licensed (nonexclusively) to IBM for use on its PC. The earliest versions lacked support for hierarchical directory structures (PC-DOS 1.0 had only a root directory on a disk), but that was added later starting with the version used with DOS 2.0. There were some later tweaks in subsequent DOS and Windows versions such as an increase in the bit size of the field giving the total number of sectors on the disk.
Some early hard disks used this filesystem as well, but it was limited to a partition size of 16 megabytes. Later FAT versions (FAT16 and FAT32) supporting larger partition sizes were introduced as hard disks got bigger, but FAT12 remained in use on floppy disks, including the higher-capacity ones up to 2.88 MB introduced later on.