Virtual Memory allows programs to access large virtual memory spaces even when physical memory is small by swapping pages between disk and RAM as needed. With Demand Paging, pages are swapped in from disk to RAM on demand when a process needs them, rather than all at once. When RAM is full and a new page is needed, Page Replacement selects a page already in RAM to swap to disk to free up space using algorithms like FIFO or LRU. Thrashing occurs if processes do not have enough RAM frames and spend more time swapping pages than running.