External SSD contains GBs of memory even after data is removed from it
Solution 1:
I am not sure if I completely understand what you're asking, but I'll try to answer your questions:
can we factory reset the device?
If you are talking about the SSD, then there is something like a factory reset. It is called formatting and you can do it in the disk-utility app (pre-installed on macOS)
You can follow Apple's guide or this guide. In short, I recommend formatting in MacOS Extended and using the GUID table, but I am no expert whatsoever. This process will delete all files on the drive.
Also, the format it is using is ExFAT, does Mac uses it by default or it depends on the SSD? The other ones are listed in the below screenshot
ExFat is a format type. Formatting types are mentioned in the second article. In short, ExFat can be read from both windows and Mac, yet it doesn't always play nicely with Mac and may eventually lead to compatibility issues. Therefore, I would not recommend it, also because with compatability software like Paragon you can read MacOS Extended drives in Windows.
Solution 2:
Why these 2GBs of space was still showing even after the files were removed? Also, can we factory reset the device?
There can be many things that cause that space to appear used like not emptying the trash, the utility you used, how you formatted it, etc. I need to see what you did to give you a good answer.
Drives don't have a factory reset like a phone but you can erase them very easily with a tool like Disk Utility.
Also, the format it is using is ExFAT, does Mac uses it by default or it depends on the SSD?
There is no format that's dependent on an SSD. APFS is made for SSDs but one SSD isn't going to work with one format while another won't. ExFAT is just an option; there is really no default. You have to define what you want. If you want to share this device with Windows and Linux, then ExFAT is good. If not, JHFS+ or APFS are perfectly fine too.