RAM is a module that sits in your motherboard and stores active data.
Basically, RAM is a series of chips that hold data while your computer is working with it. These chips come on modules, which fit into the RAM slot on your computer's motherboard. Metal pins enable your computer to access the RAM.
When current is running through the RAM; i.e. when the computer is on; the little capacitors on a RAM chip can hold a charge. The sequence in which the capacitors hold charges translate to a binary number, which equals a piece of data for the computer. When there's no current running through the RAM, it can't hold a charge and becomes inactive, so any data it was storing is erased. This is why you have a hard drive; the hard drive stores the data while the computer is off, as long as you save the data to the hard drive before powering down.
Programs rely on RAM to function.
When a program is running, your computer stores much of the code it needs to run the program in active memory, or RAM. If you don't have enough RAM to store all the data, your computer has to go back to the hard drive to retrieve more program data, and that takes longer than accessing your RAM, so it slows your system down. When you see the little light that indicates that your computer is accessing your hard drive, it's sifting through the drive and then pulling the relevant data into the RAM for you to use. When you close a program, its data leaves the RAM and frees up space for other processes.
If you want a faster computer, add RAM.
On a basic level, the more RAM you have, the faster your computer runs. When your computer runs out of room in the RAM, it has to go to the hard drive for information. If you have more RAM, your computer can store more data in its short-term databanks, so it has to go to the hard drive less frequently. This speeds up your system. Therefore, if you want a faster computer, add more RAM to your system.