Each process in your zoo needs its own area of memory, as a place to run its code from and keep variables and results in. The data segment is truly unique to each process, but if two processes are running the same code Unix automatically arranges for them to share a single code segment as an efficiency measure. Sometimes you don't have enough to hold the entirety of all the programs the machine is running, especially if you are using a large program like an X server. To get around this, Unix uses a technique called virtual memory . It doesn't try to hold all the code and data for a process in memory.
Memory is far less expensive nowadays and even low-end machines have quite a lot of it.
On modern single-user machines with 64MB of memory and up, it's possible to run X and a typical mix of jobs without ever swapping after they're initially loded into core. Yes, programs see most of your memory as one big flat bank of addresses bigger than physical memory, and disk swapping is used to maintain that illusion. But your hardware actually has no fewer than five different kinds of memory in it, and the differences between them can matter a good deal when programs have to be tuned for maximum speed. Here's a full list reflecting early-2000 speeds and prices for a typical desktop machine. That is, it loses its marbles when the power goes off.