Well if you shut down all the programs then it can defragment the memory, but oftentimes rebooting the Mac is the best way to do this. It's because of the way the OS manages memory. Say you have 100 units of RAM. Open app1 and it uses 1-20. Open app2 and it uses 21-25. Now close app1, and check the RAM in about this computer. The free RAM is 95 units, right? Well, sort of. That's how much free RAM you have, but the largest chunk of free RAM is only 75 units (apps can only use contiguous memory space, not fragmented memory, so you only have 75 units of usable memory). That's because app2 is still using units 21-25. If you close and reopen app2, then the largest free chunk will increase to 95 units. The reason defragmenting the memory often requires a reboot is that often there is a background process running that uses memory. If this background process began after a few apps were open, then even with all apps closed, memory will still be fragmented. you've got to either reboot or quit and restart the finder using an app like Finder Quitter (http://ragesoftware.virtualave.net/).
This is the reason I close all apps when I'm finished using a mac. Maybe there are other reasons to do so, but I'm unaware of them.
[This message has been edited by Phaedrus (edited 02-05-2001).]