When you open Activity Monitor you can see a graph of how much memory your computer is using. But why are there 4 types of memory, represented by various colors on the graph?
Alex has an explanation of what all these types of memory mean — wired, active, inactive, and free — and also how memory usage affects system performance. To summarize, wired memory is used by the system; active memory is used by currently running applications; inactive memory was used by recently closed applications, which allows them to reopen quickly, and free memory is unused. For a better explanation see Alex’s Is my Mac using too much memory?