RAM is an abbreviation for Random Access Memory. This is a type of computer memory, which, unlike other storage devices including hard disks or DVDs, permits the data to be accessed directly without reading the previous content saved inside it. Each time an application is started, it's stored inside the RAM, because it can be accessed much faster than if it was read from another media. In terms of the hosting service itself, additional RAM means that more web applications can work all at once on a given server, especially if they're resource-demanding and are accessed by a large amount of people at the same time. Not like a shared web hosting plan in which the system resources of a given account may be flexible and quite often depend on what other end users consume as well, a VPS has a guaranteed amount of RAM which you can use all the time. That memory is assigned to one web server only and won't be used by other customers even if it's not in use.