A 32-bit system refers to a computer architecture that processes data in 32-bit chunks. This means it can handle 2^32 different memory addresses, allowing for a maximum of 4 gigabytes of RAM. Commonly used in older personal computers and some embedded systems, 32-bit processors can run 32-bit operating systems and applications efficiently. In contrast to 64-bit systems, which can manage significantly more memory and perform better with large datasets, 32-bit systems are limited in their capabilities. Examples of 32-bit processors include the Intel Pentium and ARM Cortex-M, which were widely used in various devices before the shift to 64-bit technology.