TechwareLabs has published an editorial titled: What is Memory and How it is Used? Memory Hierarchy Explained. Here's a clip from the editorial:
Your out buying a processor and RAM, and you keep hearing this word memory being thrown around. Everything from your processor, to your RAM, and even your video card has memory. Why do you need so much and what are the differences in the memory? Join Brad as we take a look at the hierarchy of computer memory.