RAM is basically a computer's short-term memory, it temporarily stores the information a program requires to run while it is running. RAM runs at a very high speed when compared to hard-drive speed because it is used and needed more. In fact RAM is so important that RAM size and speed can play an equal or greater part in the computer's speed than the CPU. However the data stored in RAM is lost when the computer is switched off, so it can not be used for long term storage.
Modern computers can get up to 4GB of ram, and 512MB is required to install the latest version of Windows, "Vista." In a modern operating system, when a program starts, it allocates a small portion of RAM to itself. Upon loading files or data, the size of RAM it takes up will increase. Upon closing the program, the memory is freed up for other programs to use.
RAM also known as Random Access Memory can be explained as follows. Think of RAM as your desk where you do homework or pay bills, you have your bills or homework on top of the desk working on it, so memory is where the open programs, spreadsheets, iTunes and/or web browsers reside, once you close out a program the information is then stored on the hard drive. Since a portion of the operating system is loaded into memory when the system boots up, the more memory you have the larger the portion of the OS can be loaded which allows the system to perform faster.
With the introduction of 64bit operating systems the amount of memory has greatly increased to 16GB - 48GBs of memory can now be loaded into a personal computer allowing for a lot faster load times and more information to be accessed very quickly.
With the introduction of DDR2 and DDR3 memory the speed and the threads the computer can use has increased and so systems have become more efficient.