The acronym "RAM" stands for Random Access Memory, a crucial component in a computer system. RAM serves as the short-term memory, temporarily storing data that the CPU needs for active processes. Unlike long-term storage such as hard drives, RAM allows for fast read and write operations, enabling quicker access to information, which is essential for multitasking and running applications smoothly. Sufficient RAM is vital for optimal performance, as it directly influences how efficiently a computer operates, particularly when handling memory-intensive applications like video editing software or games.