It's not a "UNIX size limitation", but a FAT32 (pretty old and outdated filesystem) limitation.
But why backup your FreeBSD system on a FAT32 filesystem anyway? If you formatted that pendrive with UFS2 you'd have a maximum file size of 8ZB!!!
Also dd copies an entire slice so you end up with a file as big as the slice itself even if it's half empty. You could use
dump(8) instead (without having to compress the output).