Virtual Memory for Dummies
Your computer has real memory and virtual memory. The virtual memory is in fact a special data file stored on your hard disk (called a swap file).
When Windows "thinks" that it needs to free up some of your computers real memory it chooses things that are currently in memory but not being used to write to "virtual memory" to make room in real memory for things that are more important and more active.
If you are making extensive use of your swap file it is likely that you really should (if practical) add more real memory as accessing virtual memory dramatically slows the system. Also when practical I prefer to have the swap file on its own partition with nothing else stored there as I find the system operates more stably that way.
Other operating systems also use virtual memory. In the case of Linux for example they use a partition just for virtual memory. This special partition also is formatted with a file system optimized for use as virtual memory.