The total bar (black + gray) equals the amount of RAM allocated to the application, with the black portion indicating the amount of RAM currently used by that application. Technically, the program would have to use the operating system's memory manager for the black portion to be completely accurate, and some programs don't do that. The black portion fluctuates in proportion to actual RAM in use.
Notes:
* Under System 6.0.x, you get the same information with the "About The Finder..." item under the Apple menu.
* Under System 7.x, you can get an "About The Finder..." choice under the Apple menu instead of "About This Macintosh..." by holding down the Option key. When you select this menu item, you'll see the mountain Finder graphic.
* Performa systems display the same information with the "About This Computer..." item under the Apple menu.