A 32-bit architecture refers to a computer system design where data is processed in 32-bit chunks. This means the CPU can handle 32 bits of data at a time, which influences the amount of memory the system can address. Typically, a 32-bit system can access up to 4 gigabytes (GB) of RAM, limiting the performance for memory-intensive applications. In a 32-bit operating system, software applications are designed to run within this architecture, ensuring compatibility with the hardware. While many modern systems have transitioned to 64-bit architecture for improved performance and memory capacity, 32-bit systems are still used in some embedded devices and older computers.