thats what most folks think saffyre - and to an extent that does happen.
Virtual Ram is basically back up for the main memory, i dont mean for space i mean for instructions. for certain instructions the main memory doesnt need to hold it resident so it gets dropped into the VM. The main Memory and VM get swapped a lot - hence the term Swap File, its where the main memory has grabbed all relevant info it swaps it into VM, this leaves it in "Memory" and therefore can be addressed but doesnt take up physical ram - which will be doing more immediate things.
as an example if you have 2 applications running - both memory hogs:
example setup - system with 2gb physical memory and 2gb(or more) VM
you have both running -
Photoshop is using 1.5gb memory and your doing usual photoshop stuff, then you switch to Maya, which needs a few hundred mb of ram to run.
Now if Maya needs 800mb to run .. obviously some of photoshop needs to be dumped into VM, photoshop is dumped into vm not Maya because Maya is the current application (most apps get put partially into VM even if they are current) so your now using 2.3gb ram .. Note you wont be using 2gb physical and 300mb of VM at this time.
Whats more likely is over time, more of photoshop will be pushed into vm as windows feels its no longer relevant to have instant speed access to it. (which is where readyboost on vista comes in).
So photoshop is now using 500mb of physical 1gb of VM
and Maya is using 800mb of Physical. Yes Not all physical is now being used - additional physical memory has been freed to help out Maya which is the current app and for any additional processes that are needed.
VM is address space, used originaly to overcome OS bit limitations. These days has been utilized and intergrated further for better uses. It does not just backup physical ram Nor does it only use it after physical ram has run out.
VM is used all the time to allow multiple applications and windows to better manage what physical memory is being used and for what. why waste physical memory on something thats not been accessed for a few hours - especially when a newly opened application could utilize the full speed of the physical ram.
Excuse the slightly random explanation... i think it made rough sense.
On a last note.. if you turn OFF Vm in windows and have everything load into physical only youll have serious limitations to what will run and how much memory youll use. Think of how many windows processes which are running when you boot dont "need" to be accessed at lightning speed every second of the day. with VM off.. all these processes WILL be wasting physical ram, unlike with VM they could be sitting in the background (still being allowed to run and be accessed because thier in memory addressed space) using half or less of the physical memory they would need - remember as soon as the process or app is needed.. itll be SWAPPED back onto physical from the Swap file (pagefile) and run as normal.
Cheers
ROfu