According to this article, memory is the heart of cognitive psychology, the branch of psychology that deals with mental processes and their effects on human behavior. Psychologists talk about different kinds of memory: sensory memory, working memory and long-term memory.
Sensory memory is the direct pathway to the mind. It is the impression that new information makes on the mind and lasts for only a fraction of a second before fading forever. This case, we can not be overwhelmed with too much information in our head and process the events that caught our attention stronger.
We often use working memory for events that will be useful to us later. For example, phone numbers, addresses, or studying a test. When it comes to words, we can only keep fresh as many words as we can say in about two seconds. People who speak very quickly tend to have a high working memory capacity because they can pack more words into those two seconds than slow talkers.
The fact is that we tend to forget about what we studied after we have taken the tests. That's because the information was not store in our long-term memory. Psychologists have found that new memories can interfere with old ones, making us believe that something happened when it never actually did. This finding is of great importance in criminal prosecutions, when witnesses try to recall events of critical importance.