When there are thousands of users trying to read/write data to many different tables, reading from the directories/files (which we saw getting created when we installed PostgreSQL and created a database with a couple of tables) will result in a miserably non-scalable system. The reads and writes will result in searching for many files, opening these files, using fseek() for specific data records, locking, editing, and unlocking. To make this a lot more scalable and faster, the concept of shared buffers (memory area) is introduced. Now, the backend processes are no longer reading from the files and writing to the files, but dealing with buffers or RAM, with significant improvement in performance. The amount of memory to be allocated is decided by the shared_buffers parameter in postgresql.conf. This fixed-size block of shared memory is allocated when the server is started.

It's not this memory chunk alone that is responsible for improving the response times...