It's really about storing institutional context and on-task learnings. The AGENTS.md can do the same thing as memory, but if you have a good memory system, in theory you never need to do any ongoing maintenance of AGENTS.md and the system will do it automatically. And because it's automatic and has a whole harness system built around maintaining the memories, you can engineer it to have not just more convenience of maintenance but also better correctness / recall quality.

Memory systems can also let AI load memories on demand so it's actually analogous to maintaining AGENTS.md plus twenty different "read this if you need to do X" markdown files.

I think the name "memory" makes sense given that the AI system is one singular system with central context (rather than a software org of multiple distinct humans with distinct memories), so the equivalent of institutional knowledge in the software org really is just akin to memory for the AI system.