I don't recall the specifics, you can change some of the various heap sizes via switches.
With 32-bit Windows the processes are limited to 2GB of User address space; you can tell the VM to try to use all of it. The problem with having a large heap size has something to do with fragmentation of the user heap.. or something. I was reading it on the Oracle site once but my eyes glazed over.
Java can use as much memory as it can if its able to allocate it from other resources as long as you don't have it set at a limit specified in the Java Settings. That is with both Windows XP and Windows 7 (32 and 64 bit versions).
With older OS (GOD FORBID and I hope your not using these now) like windows 98 and windows 95, you can only use up to about 1gb or so anyways due to its compatibility issues with Java now...
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I'm here, I have no life and I play Minecraft... What else do you wanna know?