RAM is a volatile memory that provides temporary storage for the CPU, allowing for improved functionality. However, it loses all its data when the power is turned off or the system is restarted. RAM enables faster program execution, particularly for resource-intensive applications and multitasking, thereby enhancing the overall performance of the system. The type of RAM supported by the motherboard and CPU determines the RAM used in a system, with newer versions such as DDR3 and DDR4 being released over time.