RAM is an abbreviation for Random Access Memory. This is a sort of computer memory, that, different from other storage devices like hard disks or DVDs, allows the info to be accessed directly without reading the previous content saved in it. Every time an app is launched, it's stored within the RAM, because it may 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 concurrently on a certain hosting server, especially if they're resource-demanding and are accessed by a large amount of people concurrently. Not like a shared web hosting solution where the system resources of a given account can be flexible and quite often depend on what other end users consume too, a VPS offers a guaranteed amount of RAM which you can use always. That memory is allotted to one web server only and won't be used by other clients even in case it's not used.