Adding and configuring disks in FreeNAS is very straightforward. Simply click the plus sign on the Disk:Management screen (Figure 4) to bring up the Disk: Add page.
Figure 4: Disk Configuration
Here you can set options like standby time, advanced power management and acoustic level (Figure 5). Advanced power management lets you set power usage and standby usage, a handy feature that gives you control to tweak drive power consumption at the cost of performance. Most of the time you'll be limited by network throughput, so powering down your drives to save energy isn't a bad idea.
Figure 5: Advanced Power Management
I chose to format the drives in UFS since it's the native file system for FreeNAS. Your other choices are FAT32, NTFS, ext2, or software RAID. My second choice would be ext2, largely because ext2 and its younger brother ext3 are the mainstay of Linux filesystems making it easy to find support and utilities for fixing broken filesystems.
The file system you choose doesn't matter for browsing or serving files over the network. It only matters if you want to take the drive out of the FreeNAS box and use the drive's contents on another computer without too much hassle. Now granted there are some subtle performance difference between the different options, but for a small home network, they'll all perform about the same.
FreeNAS supports software RAID (Figure 6), both common configurations such as RAID 1, 0 and 5, as well as complex configuration like RAID 1+0. FreeNAS also works with any hardware RAID controllers that are supported by BSD.
Figure 6: Creating a RAID 1 Array
The RAID management features in FreeNAS are very well laid out. To set up a RAID array, add the disks under Disk Management and select Software RAID for the file system type. They'll then appear in the RAID menus and FreeNAS will let you add them to an array. To create complex arrays like RAID 1+0, simply add RAID arrays as members of the RAID volume.