Automatic memory management means that you no longer have to set memory and never again will you be told that there is no room because you set too little. Stata 12 automatically adjusts memory usage up and down according to current requirements.
Old do-files can still set memory. Stata merely responds, “set memory ignored”.
The new memory manager is tunable. You can set a maximum memory that Stata is to be allowed to use or a minimum that Stata should not fall below. Or a niceness that tells Stata how soon after Stata realizes it can release memory, it should release the memory. Sometimes memory usage falls just to grow again, so a little delay improves performance. You can be totally nice to other users and release memory the instant it becomes available, or totally selfish and wait 30 minutes, or just go with the default of 1 minute.
The new memory manager has been designed to manage terabytes. As of June 2011, computers with 2 terabytes of memory have been announced, and computers with 1 terabyte of memory are shipping.
See New in Stata 13 for more about what was added in Stata 13.