Memory Linkage

We keep reading that if memory is not freed then there would be a memory linkage. Does it mean
1) Running application may face out of memory issue one point of time
2) Once application is stopped, that memory will not be available to other application running in the same environment.

What exactly it means if memory is not freed?
Perhaps you mean "Memory Leakage" and not "Memory Linkage"?

1 is generally true, 2 is sometimes true if your OS sucks. This also sounds like an interview question you could find the answer to on Google.
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