CPU usage is how much time a task is taking up, based on a percent. So if a task has a CPU usage of 99, that means that the CPU is spending 99 percent of its time running that task.
Memory usage is how much of your system’s memory that task is using.
CPU usage generally determines if a task is hogging up your system more than memory does. If a program starts to take an awful lot of memory though, Windows will start paging out blocks of memory to your disk, which is very slow. Windows uses what is called a virtual memory system. To your program, it looks like you have a whole bunch of RAM, which is basically the size of your physical RAM plus the size of the swap file on your disk (which Windows generally manages, but you can specify it yourself if you want). However, since the stuff on the disk doesn’t all fit in the physical RAM, windows swaps blocks of memory in and out off of the disk as needed. This makes it seem like your system has more memory than it really does, which is generally good, but the disk swapping takes a lot of time (relatively speaking) and can slow things down quite a bit.
There are two things that can make your computer appear to be slow. One is an overload of your resources, which is either CPU time or RAM swapping. The second thing is that a program may be waiting on something, like a blocked resource or a response from a network device of some sort or site, etc.
Windows likes to periodically “adjust” its swap file. Microsoft is a little fuzzy on exactly what it means by this, but while they don’t give out details, basically they are trying to optimize the swap file so that when you do have to swap things in and out of memory it will go faster. It often does this while the system isn’t doing much else, so this can cause your computer to start clicking away like mad even though nothing is really going on.
Another thing that can make Windows click away like mad is when it does a system save, which it automatically does every now and then in case you need to do a system restore. You can change how often it does these and how much disk space it takes up in the control panel.
Virus checkers will also sometimes access your disk in the background, again making your computer click away like mad even when nothing major is going on.
If things are slow, the first thing to check is CPU usage. If something is hogging more than half of your CPU time, it’s a good bet he’s the guy slowing your system down.