
A: Your seemingly simple question leads us into an intricate maze of neurons, which we shall explore in a three-part story.
The simple overview is: Nerve network patterns store memories. We recall a memory only when we activate that network of interconnected neurons.
Information flows from the outside world through our sight, hearing smelling, tasting and touch sensors. Memory is simply ways we store and recall things sensed.
Recalling memories re-fires many of the same neural paths we originally used to sense the experience and, therefore, almost re-creates the event. Memories of concepts and ideas are related to sensed experiences, since we extract the essence from sensed experiences to form generalized concepts.
Consider Sir Isaac Newton, for example. Newton "hammered wooden pegs" into the ground, and "cut sundials into stone" to measure the Sun's movement through the sky, writes James Gleick in Isaac Newton. "This meant seeing time as akin to space, duration as length. . ." Newton generalized what he observed into a concept of time.

We store — for fractions of a second — sensory information in areas located throughout the cortex. See figure. Then some data moves into short-term memory. Finally, some of that information goes in long-term storage in various parts of the cortex, much of it returning to the sensory cortex areas where we originally received it.
Information
flow from our senses into our various memories. Drawing courtesy of Bruno Dubuc and
http://thebrain.mcgill.ca/,
modified by author.Only the data that catches our attention (like a police car behind us) or because we need it soon (a telephone number) goes into short-term memory. We keep short-term data for maybe half a minute. Short-term storage is small; it holds about seven independent items at a time, such as, 'carry' numbers when doing arithmetic.
Finally information that may help us in the future (for instance, the downwind smell of a saber-tooth tiger) goes into long-term memory, where it can last a lifetime.
Long-term memory involves three processes: encoding, storage and retrieval.
How do our brains consolidate a new short-term memory, such as "Delicious apple' and place it into long-term memory?
The
route information travels from the hippocampus, around the areas in the limbic
system (thin blue line in the drawing) involved in complex memory, learning and
spatial memory then fans out into various regions of the cortex associated
with cognitive, motor, emotional and spatial processing (aqua areas),
before finally returning to the hippocampus. This path is called the Papez
circuit. Drawing courtesy of Bruno Dubuc and http://thebrain.mcgill.ca/.We use the hippocampus, an ancient evolutionary part of the cortex, to consolidate new memories. An event creates temporary links among cortex neurons. For example, 'red' gets stored in the visual area of the cortex, and the sound of a bitten apple gets stored in the auditory area. When I remember the new fact, 'Delicious apple', the new memory data converge on the hippocampus, which sends them along a path several times to strengthen the links.
The information follows a path (called the Papez circuit and illustrated in the figure), starting at the hippocampus, circulating through more of the limbic system (to pick up any emotional associations, like 'happy fall day', spatial associations 'apple orchard'), then on to various parts of the cortex, and back to the hippocampus. Making the information flow around the circuit many times strengthens the links enough that they "stabilize," and no longer need the hippocampus to bring the data together, says neuroscientist Bruno Dubuc of the Canadian Institutes of Neuroscience, Mental Health, and Addiction. The strengthened memory paths, enhanced with environment connections, become a part of long-term memory.
Next week I will tell the second part in this three-part story: "How neuron networks store and retrieve memories."
The brain from top to bottom by Bruno Dubuc, Canadian Institutes of Neuroscience, Mental Health, and Addiction
Medical, Science and Nature Images by Scott Camazine
Neuroscience for kids by Eric Chudler, University of Washington
Brain Facts and Figures by Eric Chudler, University of Washington
Spatial short-term memory pinpointed in human brain, National Health Institutes, 1998.
(Answered March12, 2007)