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The computer stores different types of information in different ways, depending on what the information is, how much storage space it requires, and how quickly it needs to be accessed. This information is stored in its "short term" memory and its "long term" memory.
Your system memory (or RAM) holds information that you or the computer are working with right now. This is the computer's "short term memory", and is designed to be able to feed information to the processor at high speed so the processor isn't slowed down too much while waiting for it. However, this short-term memory disappears when the computer is turned off. This is why you must always save a file that you are working on before turning off the machine.
Longer-term storage is provided by your hard disk drive, floppy drive and other devices, where information is stored permanently in the form of files, ready for you to retrieve when you need it. When you want to use your spreadsheet program, for example, the computer loads the instructions that are stored on the hard disk that tell the computer how to run it, from long-term storage (your hard disk) into short-term memory.