format a usb flash drive as fat32 but it defaults to fat16

Did you try and fail, or did you just listen to the FUD? I've never had a USB stick end up in FAT16. I don't even think it can do it. You have to use the diskutil command line utility to format FAT16.

Make sure you use MBR as the partition scheme.

There will always be hidden Mac folders. That's how the Finder works. It writes a lot of hidden stuff to drives.

Used Terminal. I was able to format the drive in FAT32 but did not use MBR. I don't know what command to use in Terminal to correctly format the partition scheme. Thanks in advance.

man diskutil

Look at the eraseDisk and the partitionDisk verbs.

eraseDisk  [-noEFI] format name [APM[Format] | MBR[Format] | GPT[Format]] device
                Erase an existing disk, removing all volumes and writing out a new partitioning scheme containing one new empty
                file system volume.  If the partitioning scheme is not specified, then an appropriate one for the current
                machine is chosen.  Format is discussed below in the section for the partitionDisk verb.  Ownership of the
                affected disk is required.
                If -noEFI is specified, do not create EFI partition on the target disk.

partitionDisk is too much information to put here.

I'm not certain, but I think MBR[Format] means you can use MBR or MBRFormat.

So,

diskutil eraseDisk FAT32 Foo MBR disk#

Use a Microsoft Windows computer

Fat whatever is Not a Native Format even in Disk Utilities on Ventura

The dot_clean utility can be used to remove the metadata files (._filename)