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FAT32 file entry accumulation after deletion

I’m working on an embedded system that reads from a FAT32 formatted SD card.
While reading articles about the file system, something came to my mind about what happens to the directory entry when the user deletes a file :

The file name simply gets its first character replaced with 0xE5, but the space occupied by the entry actually isn’t freed for another entry to be written here. It remains occupied, for eventual undeletion purposes it seems.
If the system creates and deletes 100 files on a daily basis, all of their entries will still occupy space unless I re-format the card.

Here is my question :

Does that mean that if i want to create another bunch of files, the root directory will keep growing on the data space because it will allocate clusters for its new entries instead of overwriting entries that are marked as deleted ?

This doesn’t seem very efficient space-wise for systems that create and delete files quite often, and I’m unsure about whether such a popular file system really does this, that’s why I’m asking.