A recent update to the NTFS client for Window places limits on the file-sync system. Support for FAT, exFAT and ReFS volumes has been removed with NTFS now the only local disk format supported. The problem is - they forgot to let people know the change was coming.
After the issue was reported by a number of readers to OnMSFT, they followed up with Microsoft who said they had forgotten to include a message warning users of the change.
If you've been caught out by this, there are some remedies. FAT drives can be converted to NTFS using the "convert" command via the command line. But ExFAT and ReFS volumes will need to be reformatted.
If reformatting a drive is your only option and you don't want to do that, you can move your OneDrive folder to an NTFS-formatted external drive like an SD card if you have a spare slot.