Why does a 32-bit server support 32GB RAM

32bit-64bitmemoryvirtualization

I just got an old IBM x445 with 4xXeon and 32GB RAM home. I happily put in Win2008R2 DVD but got a bit surprised when it said the system only has 32-bit CPU. A quick Google confirms that.

What does a 32-bit system use more than 3-4GB RAM for? Can the OS run 10 4GB processes? Or does the process need to have explicit PAE support?
What can I do with this box? I want to host virtual servers on it. Will it work to run 32-bit Win2008 Datacenter and allocate 4GB to each virtual server?

Edit: Rephrased as some answers pointed in a bit newbie direction.

Best Answer

In case you want to read up on the theoretical aspect of this question, the reason you can have up to 64GB of RAM on a IA32 server is PAE. It's basically a trick on the page table level to make use of the 4 extra address lines available since the Pentium processor.

The Wikipedia page says you need a Datacenter or Enterprise edition of Windows Server to be able to use 32GB of memory.