What is the use case of having 2,000 times more RAM than the original? I imagine some interesting things could be done with that, if you allow applications to use more than original limits, or have "save states" for the operating system where you can swap another program in quickly wherever it was running.
16 MB of that RAM is allocated for the original Commodore RAM Expansion Unit (REU); 16 MB can be used as an alternative RAM expansion (GeoRAM). Other blocks of memory are used for stuff like cartridge ROMs. Those are like hardware buffers. Then there is software running to manage the machine, to be able to access the network, USB sticks and have bitmap buffers for the emulation of matrix printers. 16 MB is allocated as RAM disk for downloading temporary files from the internet. Adding all up, you'll get to approx. 64 MB, so there is some room for future needs.