If you ever ran a Windows operating system, then I'm most certain that you have encountered at some point in time an error saying something like "Your system is low on virtual memory..." and so on, but you have never really figured out what it meant or what virtual memory really was. The virtual memory is part of most operating systems out there. On Linux, if I'm not mistaken, the virtual memory is called 'swap' and occupies a separate partition on the hard drive.
Virtual memory is used by the operating system in order to enhance the storage capacity of the working memory, without requiring the installation of additional Random Access Memory modules.
Let's take a typical example. You have a computer with 64 megabytes of RAM. However, the operating system requires at least double of that in order to run properly, yet somehow it manages to run a whole range of applications without experiencing significant problems. This is because it makes use of the virtual memory.

The virtual memory of the operating system resides on the hard drive in a file, paging file in the case of Windows operating systems, or on a separate partition, the case of swap partitions on computers running Linux distributions. When a computer runs an application it relies on the RAM memory to provide fast information for the CPU. But most of the time, the information loaded into the RAM modules is used only once after being retrieved.
So in order to keep the RAM memory as free as possible for other applications, the memory banks that haven't been used recently are copied to the hard drive into the virtual memory, from where they will be later retrieved if necessary. This basically takes place automatically without you even knowing, leaving you under the impression that the capacity of the RAM is infinite when in fact you're only running on 64 megabytes.
The disadvantage of the virtual memory it that it resides on the hard drive and as we all known it, hard drives are significantly slower when it comes to read/write operations. Thus if you have low capacity RAM modules and a significant amount of virtual memory, your computer will still work relatively well, but with a noticeable drop in processing speed.
The perfect scenario would be to have just enough RAM to run all applications at once, so that the virtual memory could be used only when changing tasks. If this doesn't happen, then the computer will work only with swap memory and will seem extremely slow.