Random Access Memory is the working memory of the computer. RAM is the memory used for storing data temporarily while working on it, running application programs, etc. "Random access" refers to the fact that any area of RAM can be accessed directly and immediately, in contrast to other media such as a magnetic tape where the tape must be wound to the point where the data is. RAM is called volatile memory; information in RAM will disappear if the power is switched off before it is saved to disk.
These days, no matter how much memory your computer has, it never seems to be quite enough. Not long ago, it was unheard of for a PC (Personal Computer), to have more than 1 or 2 MB (Megabytes) of memory. Today, Windows XP requires a minimum of 256MB to run effectively. We recommend a minimum of 512MB for optimal performance when using graphical and multimedia programs.
As an indication of how much things have changed over the past two decades, consider this: in 1981, referring to computer memory, Bill Gates said, "640K (roughly 1/2 of a megabyte) ought to be enough for anybody."
Finding the right memory for your machine can be confusing. Memory comes in a mind-boggling mix of shapes, sizes, speeds, and capacities. Use Crucial Technology’s online Memory Advisor to find the right memory for you.
Link: How RAM works, RAM Guide, Everything you need to know about RAM