There are three ways memory is used in an iPaq:
1. To run programs in, same as a computer and RAM.
2. To store programs, same as a hard drive
3. To store documents, same as a hard drive
An added memory card can do two of those three. It can be used to install programs, or to store documents. When you do an install on your PC, there should be an option that asks where you want to install to. By default it normally goes to the main system memory. But the pull down will also offer any memory cards in the unit at the time.