32-bit Windows is limited by MS to 4GB. But you get only ~3GB RAM because the last GB is used for all PCI devices mappings to the same 4GB usable space (compatibility reasons). So the overlapped RAM can only be remapped to end of physical RAM (which you Win cannot access).
PS: I've seen some reports of vanilla XP being able to use more than 4GB, but that SP1 put the 4GB limit because of cheap HW drivers.
PS2: check PAE (Physical Address extension) in wikipedia.