And then, in real life:
Wired memory is memory that has been reserved at the system level. No other process is allowed to touch it, it cannot be swapped out to disk. It's for critical processes like device drivers that can't afford to have their memory borrowed.
Active is memory allocated by ordinary processes. It is either being used right now or has been used in the recent past. The system will avoid swapping this memory out to disk if at all possible.
Inactive memory is just like active memory, but it's been a while since any process has touched it. Because it's not seeing a lot of action, it is considered relatively safe to swap it out to disk without dramatically affecting performance. If there is not enough free memory out there and a process asks for more, this is where it will come from.
Free memory is RAM that no process has claimed. It's totally up for grabs.
Used is just the sum of wired, active and inactive. Used plus free is the total installed RAM.