Jack, you ask some pretty direct and difficult questions for a 12 year old! Some of the best minds in science are perplexed by this question. The answer is that no one knows the answer - not fully anyway.

Here's a selection of things to get you started and I'm sure that other people will add to this.

The brain is where it all happens - we know that much. It is made of billions of special cells called neurons, which have a particular property: they can carry and transfer electrical potential... let's call it electricity to keep things simple. Each neuron - and remember, there are billions of them - can connect to other neurons via a little junction called a synapse. There are thought to be 100 trillion synapses in the human brain.

It seems that all thought and memory occurs as a consequence of "electricity" held in neurons AND the passage of electricity across synapses AND the positions of the synapses. With so many neurons and synapses there is potential to store an awful lot of memories.

Sleep is very important for memory. It is thought that sleeping allows the brain to do its "filing" - transferring short-term memories to long term memory centres where they can be recalled if needed.

Short- and long-term seem to be different things to a certain extent. Damage or decline of the brain can cause various conditions where short term memory seems not to be stored at all.

I met a man once who was very interesting to talk to, knew a lot about many things and could remember everything before a certain date on which he had suffered a bleed on his brain. Since that date, though, he could only remember things that happened in the previous 10 minutes; so he could remember coming in to my house, but not where his car was parked. He would write down the street it was parked in and he could find the car because he knew the street from before his stroke. When he changed car he needed to write down what make and colour of car it was, as well as where it was parked.