Playing from memory only puts only 1 file at a time into memory. At the end of the track it loads the next track. So, the 1 GB is only used if you have a track that is 1 GB or more long. That is why you are seeing smaller memory usage than the full 1 GB. If you look at your track size and the memory size you will see they correlate and will be the same size for uncompressed tracks.
In previous versions, MC put the compressed file (like flac) into memory and decompressed after that. Now, they decompress first and put the uncompressed (wav) data into memory. The change was because some people complained about the extra cpu cycles being used to decompress when a track was playing. Unfortunately, some now are concerned that the uncompressed data is too big (more than 1 GB) and that causes overhead to fetch, decompress and load the data, while the track is playing. You can run into this if you are playing long high rez files of classical or albums with very long tracks.
In previous version I used play from memory, mostly because it was there. With the new scheme I have dropped using it. I never did hear any real difference.