Bootable flash usb drive exfat or ntfs?

That is not accurate when creating a bootable installer. If you try to use createinstallmedia and point to a volume that is formatted as APFS, you will get an error that the filesystem cannot be APFS.

P. Phillips' answer is correct - HFS Journaled with a GUID partition map

Make sure you are 100% certain your response is technically accurate before posting. When you share incorrect info, it confuses people and makes matters worse.

~ sudo /Applications/Install\ macOS\ Big\ Sur.app/Contents/Resources/createinstallmedia --volume /Volumes/Untitled  
Ready to start.
To continue we need to erase the volume at /Volumes/Untitled.
If you wish to continue type (Y) then press return: y

APFS disks may not be used as bootable install media.
An error occurred erasing the disk.

My experience is that this error message occurs when the Installer is running, likely an access issue to an already mounted underlying image or other file contention issue. Quitting the installer App fixed this issue for my case.

That is not accurate when creating a bootable installer.

But OT wasn’t talking about a bootable installer. The statement regarded installing the OS on a flash drive. In that case, it depends on which OS you wish to install.

Do you intend to put a system on the USB drive and boot and run from it? If so then it should be APFS with a GUID partition.

If you are making a bootable install drive it needs to be Mac OS journaled

HFS Journaled and GUID Partition Map.

And be sure the Drive is at least 16 GB

You're right, It ends up as APFS but has to start out as HFS Journaled,