Additional memory for the game.

Am I understanding correctly? Is this also the reason why the game sometimes crashes on Mega-huge maps, and why there might be problems in general if there are too many things placed on the map? I just hadn't thought about this before and assumed that everything depends on the capabilities of your PC and conflicts in the system (if there are many modifications/changes). So, there is also this annoying limitation?
*Also a question, if I'm not quite right. Does this memory size affect the maximum size of the game itself, or the maximum amount of RAM (well, in simpler terms, the resources allocated for the game to run during gameplay)?