In modern operating systems, including Windows, application programs and many system processes always reference memory using virtual memory addresses which are automatically translated to real (RAM) addresses by the hardware. Only core parts of the operating system kernel bypass this address translation and use real memory addresses directly.
Virtual Memory is always in use, even when the memory required by all running processes does not exceed the amount of RAM installed on the system.
All processes (e.g. application executables) running under 32 bit Windows gets virtual memory addresses (a Virtual Address Space) going from 0 to 4,294,967,295 (2*32-1 = 4 GB), no matter how much RAM is actually installed on the computer.
In the default Windows OS configuration, 2 GB of this virtual address space are designated for each process’ private use and the other 2 GB are shared between all processes and the operating system. Normally, applications (e.g. Notepad, Word, Excel, Acrobat Reader) use only a small fraction of the 2GB of private address space. The operating system only assigns RAM page frames to virtual memory pages that are in use.