Very basic words:
The foundation for the system provides the answer to how VMM is able to perform these seemingly miraculous functions. VMM is constructed upon a page-based memory management scheme that divides all of memory into equal chunks called pages. Each page is 4096 bytes (4K) in size with no discrimination applied as to how a page is used. Everything in Windows NT—code, data, resources, files, dynamic memory, and so forth—is implemented using pages of physical memory.
Because everything in the system is realized via pages of physical memory, it is easy to see that pages of memory become scarce rather quickly. VMM employs the use of the hard disk to store unneeded pages of memory in one or more files called pagefiles. Pagefiles represent pages of data that are not currently being used, but may be needed spontaneously at any time. By swapping pages to and from pagefiles, the VMM is able to make pages of memory available to applications on demand and provide much more virtual memory than the available physical memory. Also, pagefiles in Windows NT are dynamic in size, allowing them to grow as the demands for pages of memory grow. In this way, Windows NT is able to provide virtually unlimited memory to the system.