By that you mean the memory that's also used by all other processes, right? Whereas a dedicated video card uses its own memory?
Exactly. Using memory on the chip is good because 1) it doesn't take away from normal memory the computer could use* and 2) it's much, much faster.
* graphics card memory is, however, part of the 4GB addressable space on a 32-bit machine, so it will still limit the maximum amount of system memory you can have. So with a 512MB graphics card you can only have 3.5GB of regular RAM (if you have more it will be ignored). Actually, you'll have less, because other devices also take up part of the address space.
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