Basically, 2.01 and 3.0 are aware of the memory and try to use it. The issue (at least one that I know of and have hit before) is the aggressive caching of the player application. It is great for limited memory, filling the buffer with audio and keeping the drives spun down. The problem is that the cache tries to fill as much as it can. With large amounts of memory available, the caching routine can choke out other applications and cause them to fail due to memory resource starvation.

There are better descriptions in other threads, but it comes down to the fact that the bulk disk reads are done in kernel memory. Competing applications (player, telnet, other daemons) cannot allocate the RAM needed while these reads are done, so those applications give memory allocation failures.

The reservecache option forces the player software not to use the extra space for caching, keeping cache operations quick and small enough not to interfere with the kernel (and other software) operations. The practical result is that 2.01 can use the extra memory, but you have to force it not to use that memory for cache beyond a certain "breakpoint".

Note that the memory is still very useful for hijack and other purposes.