Memory in AI agents works on two levels. Short-term memory holds everything that happened in the current conversation or task. Long-term memory persists information beyond the current session. Both allow agents to be contextual rather than stateless.
Without memory, every interaction starts from zero regardless of prior history — which frustrates users and creates inefficiency. Knowing who you are talking to, what has happened before, and what decisions were already made is the difference between an AI that helps and one that forces users to repeat themselves constantly.
