There are a number of types of memory in (and for) the ATmega.

Flash memory is the place where compiled sketches end up. This memory has an important property: it retains its contents even when power is off, yet it’s modifiable (even by the ATmega itself – that’s how the boot loader works). An ATmega328 has 32 KByte of flash memory, enough to store fairly substantial sketches. When an ATmega is powered up, it starts executing the code stored in its flash memory.

RAM memory is the work memory where variables, buffers, strings, and other bits of data reside which get used and changed by the running sketch. The contents of RAM memory is lost when power is turned off, but access to the data kept here is extremely efficient. RAM is limited to 2 Kbyte on an ATmega328, and often a scarce resource, especially since all strings also need to stored there (these get copied from flash on startup).

EEPROM memory is the “configurable” memory available to a sketch. It’s very similar to flash, but not used for code – only data can be stored in EEPROM, and you need to call specific routine to read and write data (i.e. copy them to/from RAM). EEPROM memory retains its contents, which makes it very suitable for configuration settings, encryption keys, i.e. data which needs to be retained. There are 2 KByte of EEPROM in an ATmega328.

That’s it as far as built-in memory goes. The are many other types of memory (some far larger than the above), but they all have to be connected to the ATmega as “external memory” through its I/O pins. External memory is slower (sometimes dramatically so), and requires more code to work with.

There are three common ways to use external memory: I2C, SPI, and parallel (links / images from Wikipedia).

I2C memory uses the “I2C bus” protocol to talk to external hardware. The I2C bus is also known as the “Two Wire” bus, because it requires only 2 I/O lines (plus ground and power, i.e. 4 wires). The I2C bus is several orders of magnitude slower than the above three types of memory, but one advantage is that it is very low cost, and that I2C-capable chips are small and available in many shapes and sizes. The main types of I2C memory chips are SRAM (static RAM, same as in the ATmega) and EEPROM (also same as in the ATmega). The most common sizes are in the order of kilobytes, or dozens of kilobytes. Adding I2C memory such as the Memory Plug for JeeNodes, is cheap and simple. It’s also relatively slow – requiring in the order of a few milliseconds to write out a page of 32 bytes.

SPI memory uses the “SPI bus”, which needs 3 I/O pins shared among all SPI devices, plus 1 I/O “chip select” pin per device. It can be one or two orders of magnitude faster than I2C. The choice of SPI memory chips is more limited than I2C, but the memory chips are usually larger (such as the 2 Mbyte chip used in a JeeLink). The advantage of SPI over I2C is speed, but it’s still a serially-connected solution, and therefore still an order of magnitude slower than the ATmega’s built-in memory.

Parallel memory uses many I/O pins together to get address and data information exchanged at a higher speed. This option is not really practical with an ATmega328, which has a limited number of I/O pins. It’s the way “real CPU’s” work, connecting the processor with external memory using over a hundred I/O pins.

One more memory type is worth mentioning here, because it’s easy to interface with an ATmega:

SD and µSD cards are a form of external flash memory, used widely in digital camera’s, for example. They offer by far the largest memory sizes (2 GByte and up) for a very low cost. The reason these cards can be used, is that the SD standard supports an SPI fallback mode, which means that they can be connected in the same way as other SPI memory chip solutions. Two caveats: 1) some initial handshaking will be needed to put an SD card into SPI mode, and 2) SD and µSD cards tend to be slow in SPI mode, i.e. nothing like SPI-capable memory chips.

In case you think that cheap and ample memory storage has always been so convenient: here are some flashes from the past of funky technologies used decades ago – check out mercury, drums, tubes, cores, and bubbles!

Update – see also this weblog post about RAM usage.