vu, both extended memory and expanded memory refer to standards for using the memory beyond the DOS conventional memory limit of 1Mb set by the design of the processor in early PCs. Expanded memory (EMS -- Expanded Memory Specification) is an older standard which allowed programs to page 64K chunks of extra memory in and out of a special reserved area of memory. It's the only method available to machines such as XTs which have a pre-286 processor. EMS was set up by Lotus, Intel, and Microsoft prior to 1988, and this specification is sometimes referred to as LIM EMS. It's typically used only by old DOS programs.
If your machine has a 286 processor later, it can use extended memory (XMS). In Windows 3.x and earlier DOS based operating systems, this still isn't very fast, because the processor has to keep switching from real mode to protected mode to make use of the memory, due to the constraints of the DOS design, which derived from the older processors. On a 286 the process is frankly absurd. The 286 has to pretty much shut itself down in one mode and wake itself up in another. That chip should never have been manufactured, and is one important reason poor old OS/2 has such a hard time of it. On a 32-bit processor, such as 386 and beyond, extended memory is straightforward to use, which is why Windows 3.x on a 386, 486 or Pentium more or less works.
Once you're use a 32-bit operating system, the machine operates with the full available memory. Windows 95 is not a full 32-bit operating system, for reasons of compatibility with DOS based systems, and in order to reduce the memory footprint of the operating system. The DOS conventional memory limit plays some part in Windows 95, especially when you're running programs written for DOS or Windows 3.x
For more details, look up the terms mentioned here in the Free On-line Dictionary of Computing at http://wagner.princeton.edu/foldoc/
- Neale Morison