How to create a FAT16 partition on an SD card with OS X El Capitan?
You can format any drive to FAT16 with newfs_msdos Command

1) Launch Terminal

2) Find The Drive you Want to Format

#mount
/dev/disk2 on / (hfs, local, journaled)
devfs on /dev (devfs, local, nobrowse)
/dev/disk4s1 on /Volumes/USB_Disk (msdos, local, nodev, nosuid, noowners)


In this case, my disk is disk4.  Your disk will most likely be different!  Be sure to reference the correct disk - you can and will lose your data if you format the wrong drive!!!

3) Unmount the disk

#diskutil unmountDisk disk4
Unmount of all volumes on disk4 was successful


4)  Format the drive 

#sudo newfs_msdos -F 16 /dev/disk4


After a few moments, your drive will format.

5)  Remount the drive (optional)

#diskutil mount /dev/disk4


It will probably show up as "NO NAME" on your Desktop.  You can rename it here or to do it at the time of formatting use -v Type in a Volume Name when you format the drive.