The OS sometimes reserves quite a chunk. For example, Windows XP really only has 2.25GB available. Putting more RAM in is pretty useless unless you switch to 64-bit.
No. The Windows and Linux kernels are hardwired to reserve a huge chunk of virtual addresses for kernel memory space. Windows can be toggled between reserving 2Gb and 1Gb (the latter of which Linux does by default). I assume this is so that a system memory address can be identified by testing a couple bits, and the minimum size is presumably limited by the chunk of addresses eaten up by memory-mapped devices like video cards.
