From StackOverFlow (IIRC - I lost the original link). An incredibly simple analogy to describe the differences between disk space and disk memory.

Found a link from Tech Republic that references the analogy and other interesting analogies, useful to understand tech concepts.

Computer memory (RAM) is like the size of your desk.

If you are doing some research and you have lots of reference books and papers you want to constantly refer too but only have a small desk you would soon fill that desk leaving you only a small space to actually work on. Books piled on each other would have to be slowly moved around, making sure you don’t loose the order the books are in while you look for the info you want. Eventually you will knock stuff off your desk and it will ‘crash’ to the floor making you stop your research (this is when a small glimmer of understanding starts to appear in their eyes). More RAM (computer memory) is equivalent to having a much larger desk on which you can lay out all your reference material so that it can be got at quicker and easier and you can spread yourself around more with less fear of your reference materials ‘crashing’ to the floor. Therefore the bigger the desk (the more computer memory or RAM you have) the quicker you can work and the less likely your computer will crash (this is when a glimmer of understanding gets brighter).

I explain that disk space is the same as ‘cupboard space’.

It is where you store things. The more cupboard space you have access too in your office the more papers, books, etc, you can store ready for easy retrieval; especially if you label the cupboards, files and folders properly (and this is when the glimmer of understanding becomes a shining light).