You can back up games to the external fat32 and play them. Multiman will split the big files for you and the games will show as split in multiman. When you try to launch a split game multiman will then reassemble the file and install it to your internal drive on the ps3. Most split games will play from the external. The only problem I've had so far is that the left usb port won't work for launching games though they will show in the xmmb for multiman. So if you have 2 externals like I do then you can only "see" all your games but not be able to launch the games on the left usb port. The games from the left port will kick back to xmb when you try to launch them. So what I do is only use the left port for backing up or for checking inventory to make sure I haven't backed up the same game twice. If I want to play a game from the 2nd external I use the right usb port.
Originally Posted by mat
As a side note I'd like to add that if you have a cecha01 or other backward compatible ps3 then get yourself a cobra dongle and get your ps3 on cobra cfw, then you will then have the ability to backup and play ps1, ps2, ps3 games and even play your backups of psp games with ease. I hear you can even backup bluray movies and play them with cobra.
CECH-2001A 120g, Rogero 4.21v1.09
CECH-A01 250g, cobra 4.30+Cobra Dongle<--YLOD 4/17/13