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Desktop PC's have a RAM and a separate HDD (hard drive). Pocket PC's don't have a separate HDD. Think of the internal memory in the Pocket PC as a virtual HDD. When installing programs on a PPC it is stored to the virtual HDD being the internal memory.
On a desktop programs are installed and it goes to the HDD. When executed the executable is loaded into memory and then ran by the CPU. On a PPC there is a small portion of the RAM that is used as virtual memory (much like the memory on your desktop). The program is loaded to this virtual memory and then executed by the CPU.
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