RAM (random access memory), or memory as its often called are small strips of circuit board that plug into you computers motherboard. RAM often get confused with disk space (hard drive) but in reality they couldn't be more different. As ever, I'll try to explain in plain english how it all works...
RAM is the 'working space' for your computer.
As programs or files (for example a word document) are opened they a temperaraly opened in RAM. Why? You many ask... Because its fast, very fast, allowing the computers operating system to make changes quickly. Your computer is always juggling what is held in the systems RAM. As your system moves information in and out of RAM it has to store the information leaving the RAM somewhere, right? It gets stored on your hard drive, which is a drasticly slower than RAM. You may have noticed when you have multiple programs and files open your computer gets slower, this is your computer running low on RAM and writing more and more information to the hard drive. So to answer the question I get asked a lot, "how much memory do I need?" "As much as possible" would be the answer (if it was free!!) because we want to limit the computer using the hard drive (remember its slower) but a minimum of 4 Gigabytes is a good start.