lets an operating system needs 120mb of memory in order to hold the running program

but there is only 50mb of available physical memory stored on RAM chips. The operating system will then setup 120mb of virtual memory and will use a program called the virtual memory manager(VMM) to manage that 120mb. The VMM will create a file

on the hard disk that is 70mb in size to account for the extra memory that is needed. The

operating system will now proceed to address memory as if there were actually 120mb of real memory stored on the RAM. Even though there is really only 50mb. So to the operating system it now appears as if the full 120mb actually exists. It is the responsibility of the VMM to deal with the fact that there is only 50mb of real memory.

The paging file and RAM:

The virtual memory manager creates a file on the hard disk to hold the extra memory that is needed by operating system this file is called a paging file (also known as swap file).

If the size of virtual memory is quite larger than real memory then more swapping to and from the hard disk will occur as a result. Accessing the hard disk is far slower than using system memory.

With virtual memory multitasking is passible even when there is not enough memory to hold all executing program at once.