The computer's RAM is referenced by physical addresses, in a way similar to giving directions to a house within a condo or a residential complex, or a building in a city center. This means you need some kind of container to hold those addresses, which you might think of as simple numbers.
Computers normally represent data in a binary numerical system consisting of zero's and one's, as this is an easy step up from the mode of operation of the computer's internal electronic components. What we call a "bit" is simply a binary digit, that is, 0 or 1. Data is organized normally in groups of 8 bits, also called bytes. You can use a number of bytes to represent numbers, letters, or any other symbol. Memory addresses have to be represented in bytes, and therefore we are limited to representing as many different memory locations as your bit density allows.
Since each bit can only have two possible values (1 and 0), you can easily calculate the number of different values generated by a sequence of n binary digits with 2^n (two raised to the power of n). For example, 2 bits means 2² = 4, therefore you can generate four possible values. Using 32 or 64 bits lets you represent data differently. For instance, a 64-bit container may represent numbers much, much larger and with higher precision than a 32-bit container, because 2^64 is much much bigger than 2^32.
In practice, what this means is that using a 64-bit application in a 64-bit operating system you can theoretically access much more RAM than you would using 32-bit applications and/or OS's. This may be a requirement for the large open world of TW3.
A practical limitation of 32 bits is that the largest number you can represent is precisely the equivalent of 4 GB. In other words, a pure 32 bit system could not possibly hold address numbers beyond that 4 GB limit. This is not necessarily true, however. For years CPU's have implemented a feature called Physical Address Extension [1] that enables 32-bit CPU's to utilize much more RAM than the 4 GB limit. This was useful in the early days of big RAM when people like me still had 32-bit OS's (like Debian Linux) and more than 4 GB of RAM. However, guess what? Surprise! This feature is blocked in Windows [2].
Hope this was useful.
[1] http://en.wikipedia.org/wiki/Physical_Address_Extension
[2] http://www.geoffchappell.com/notes/windows/license/memory.htm
