I believe the following is a practically accurate way to look at it:
For all intents and purposes your brain storage capacity might as well be infinite. Unfortunaltely, the librarian in charge is a moron.
Think about it this way. Every single piece of information you get gets written down on a piece of paper. When the piece of paper gets full the halfwit librarian looks at it and decides if it’s important. If he feels that it’s important he copies it down in one of a series of loose leaf books for ready reference. If he doesn’t think it’s important he throws it on the pile.
By the time you’re an adult there’s a wall of loose leaf folders full of information that is pretty much at your fingertips (except where it got copied down wrong, or water damaged. There is also a pile the size of Mt. Everst of everything else that is stored in no particular order.
For example, in my shelf there is a book entitled “My Wife.” Come glance through the tabs with me (they are in no logical order.) Ahhh, here it is, “Things not to say to:”
In here I keep a list of everything I ever said or did that pissed my wife off.
This is a relatively important tab in a relatively important book so it’s kept well and up to date and referred to often.
Here’s another one. “My first dog.” I started this book when I was nine. It looks like a book written by a nine year old. Haven’t looked at this one for a while.
Here’s another one “Experiences with mind altering substances” as you can see, it’s pretty incoherent, except for this well kept tab of “Things not to do with.”
If you want a better mental library than you have to donate more effort to organizing that Everest sized pile into looseleaf books and tabs.
How well you do this is how good your memory is.
Occasionally, I’ll have an idea where something is roughly located in the Everest sized pile. If you look closely at it, it’s not just one pile, it’s several. Some of these piles represent stuff not important enough to copy down, yet important enough not to throw in the big pile. There are not handy, but with some effort I can generally put my finger on something in this pile by standing around for a few seconds and saying “ummmmmmmm…”
That’s memory.