Memory: This is the total amount of RAM installed.
Used: This is the total amount of RAM used.
Wired: Information in RAM that can't be moved to the Mac's hard drive. The amount of Wired memory depends on the applications you are using.
Active: This information is in RAM and has been recently used.
Inactive: This information is in RAM but it is not actively being used; it was recently used.
For example, if you've been using Mail and then quit it, the RAM that Mail was using is marked as Inactive memory. Inactive memory is available for use by another application, just like Available memory. However, if you open Mail before its Inactive memory is used by a different application, Mail will open quicker because its Inactive memory is converted to Active memory, instead of loading it from the slower hard drive.
You can use the Purge button to remove the information in the inactive memory.
While purging the inactive memory, the Finder may slow down and not respond for several seconds.