Virtual memory is non-physical memory.

Windows uses virtual memory when it doesn't have enough "regular"
physical memory to preform a task. When it does this, Windows uses your hard drive to store information that normally would be put into your RAM memory. Here's an overly simplified example:

Let's say you have 32 meg of RAM available. Now, you load a program that takes up 20 meg, and another that takes up 22 meg. You need a total of
42 meg, but you only have 32 meg of actual RAM memory. However, both programs still run. What's happening?

Windows is using 10 meg of hard drive space to supplement your physical
32 meg of RAM (don't worry, this 10 meg will be erased once Windows is done with it).

I know what you're thinking. Why bother to add extra RAM to my desktop if it can use hard drive space instead? Main reason - RAM is much faster.

Whenever you're using a lot of virtual memory, you're slowing your desktop down (way the heck down). The best work around is to get more physical memory. I recommend 64 - 128 meg, depending on how many programs you run simultaneously.