Wow, this is harder to explain than I thought. The problem that I am talking about does not have anything to do with bad sectors.

As I understand it, FAT stands for "File Allocation Table." Basically,
the FAT table describes where on the disk each file is stored. For example, if you wanted to find out where file "stuff.txt" was stored,
you would look up "stuff.txt" in the FAT table and the latter would tell you that the file was stored at locations x, y, z, ... on the disk.

However, the FAT file system was poorly designed. The information in the FAT table would get screwed up every so often as a result of various computational errors (I can't think of any example off the top of my head). The practical effect of a screwed up FAT table was to make a portion of the disk unavailable for use. There was not anything wrong with the disk, the problem was a screwed up FAT table.

What CHKDSK did was to unscrewup the FAT table. I remember a friend telling me, back in the days when a 30 Meg (not Gig) HD was considered humongous, that he ran CHKDSK and recovered 2 Megs of disk space. That would be 6.6% of a 30 Meg disk.

These days, I hardly ever use the FAT or VFAT file system except on my Nokia 770 when using a flash card. I am trying to find out if (V)FAT is still a screwed up file system that requires commands like CHKDSK.