There are 2 types of storage for a computer/phone.
First, is memory, or RAM. The key thing with RAM is that it’s very quick. The downside to RAM is it is expensive to make $-wise, and when you turn off the power, the contents are lost. Computers use RAM to store short-term stuff, like the contents of a text box, or the picture of the Reddit robot while doom scrolling.
The second type, is non-volatile data storage, which used to be called hard disk space, or disk space, or storage. Those terms don’t really apply anymore as technology has moved away from spinning magnets, to flash memory, and stuff I’ve never heard of before. But the key feature is it’s cheap (relative to RAM), and it sticks around after you turn off the power. This is for your permanent stuff, like music you want to listen to while offline, selfies, or your taxes.
Sometimes, if you’re doing a lot of stuff, like looking at pictures of HD cats, while downloading spicy videos, at the same time as you’re calculating your taxes, your computer/phone needs more RAM than it physically has.
Virtual Memory uses your non-volatile data storage to act like RAM. So the temporary variables are stored long-term on your hard disk, or whatever tech you have. This is slower than using actual RAM, but it lets you keep working instead of forcing your system to crash or force you to close some windows.
In general, you should leave the factory default settings.
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