You often hear that Bill Gates once proclaimed, “640 kB is enough for anyone,” but, apparently, that’s a myth — he never said it. On the other hand, early PCs did have that limit, and, at first, that limit was mostly theoretical.
After all, earlier computers often topped out at 64 kB or less, or — if you had some fancy bank switching — maybe 128 kB. It was hard to justify the cost, though. Before long, though, 640 kB became a limit, and the industry found workarounds. Mercifully, the need for these eventually evaporated, but for a number of years, they were a part of configuring and using a PC.
Why 640 kB?
The original IBM PC sported an Intel 8088 processor. This was essentially an 8086 16-bit processor with an 8-bit external data bus. This allowed for cheaper computers, but both chips had a strange memory addressing scheme and could access up to 1 MB of memory.
In fact, the 8088 instructions could only address 64 kB, very much like the old 8080 and Z80 computers. What made things different is that they included a number of 16-bit segment registers. This was almost like bank switching. The 1 MB space could be used 64 kB at a time on 16-byte boundaries.
So a full address was a 16-bit segment and a 16-bit offset. Segment 0x600D, offset 0xF00D would be written as 600D:F00D. Because each segment started 16-bytes after the previous one, 0000:0020, 0001:0010, and 0002:0000 were all the same memory location. Confused? Yeah, you aren’t the only one.