Be it a desktop, laptop, netbook, Mac, or server machine, a computer is made up of three primary components: the central processing unit (CPU), the storage drive (hard drive or solid state drive), and random access memory (RAM).
To help understand the role which each of these components play in overall computing performance, let's have a look at each one in turn.
CPU (Central Processing Unit)
The CPU is the 'brain' of the computer, and carries out all the instructions of a computer program and operating system. To use an old-school analogy, imagine you are setting at your desk paying your bills. 'You', in this case, are the CPU.
Hard Disk Drive (or Solid State Drive)
Your computers hard drive (or you may have a solid state drive) is the place where all of your data, pictures, movies, documents, programs, etc is stored, and remains even when your computer is turned off.
Think of your hard drive as your filing cabinet. It's where you store all of your important papers that you need access to quickly, but may not need to be working on right now.
Computer Memory (RAM)
RAM is also a form of data storage, but operates much faster than a hard drive. Now go back to thinking of you (the CPU) paying your bills with your filing cabinet (hard drive) close by.
Your desk in this analogy is the RAM. If you have a very small desk, you can only work on one bill at a time. If you need to work on something else, first you need to put what you are working on away in your filing cabinet.
If you have a larger desk, you can work on more items at once, and you don't need to put anything away in your filing cabinet, which allows you to be more productive and work more efficiently.
Putting it all together
So now let's think about those 3 primary components again. You could train your brain to work faster (a faster CPU), or buy a bigger filing cabinet (a bigger hard drive), but if your desk (RAM) isn't large enough to work with all the items you need to at once, then your productivity suffers. This is why a RAM upgrade is often the simplest, least expensive, and most effective way to improve the performance and speed of your computer.