To be honest, if i had my way this thrwad would have been about a deep analysis into how console operating systems work, but i have realized that absolutely no one seems to talk about them. 

I mean we have endless breakdowns of game framerates, tons of "walkthroughs" of the UIs of the consoles, but not a single in depth analysis to what makes anything in there what it is. So this thread is hopefully to get people talking and if we are lucky some that know how these things work can share that info with the rest of us.

But some guidelines. I'm asking specifically for the PS4 OS cause we at least know that the XB1 is using a stripped down version of Windows 8/10. So onto the topic points.

1. What does the console really do with that 2.5-3GB of reserved RAM?
2. Why is it that we have operating systems that are leaps and bounds more functional than what we have in consoles which run on significantly less memory. (we can have an entire windows operating system on as little as 2GB of ram.
3. Why can my android phone keep my game state saved in the background for any number of apps or games I'm playing yet my console can do this for only one game at a time?
4. Why are features so hard to implement and take forever to come along when everyone that owns the console is using the exact same OS and running it on the exact same hardware?
5. Why can we not use the consoles we have to build "small" apps for the console?

Tagging.

That is a good question. I'd imagine it might have to do with the cost of software development of a proprietary operating system (with no template.) They could spend more money to use less ram, but the cost to just put more ram into the system might not exceed the extra cost of software development. Remember, the operating system needs to be immensely secure so that piracy does not happen. Android, Linux, and Windows have been developed and optimized over many years for the goal of running on lower end platforms. 

Edit: Actually the PS4 OS is based on FreeBSD, so scratch that. 

But thats the thing.... 

Android and Ios started life with less than 128MB or RAM. Console operating systems proper started life with the PS3/360 with approximately 56 and 32MB or Ram respectively. Yet both consoles were able to do quite a lot.

These consoles have over 2.5GB!!!!! reserved for their PS4 and yet they are still missing tons of basic features and still stutter opening pages on the UI that for all intents and purposes should be preloaded onto memory for rapid access. 

And these systems are by default immediately secure for the most part since dev access is shut tighter than a crickets asshole. Everyone is using the same operating system, yet we still have situations where updates my break some things and would need to be patched. 

Furthermore, all these OSs do have a template. XBos is based on Windows and the PS4 OS is based on FreeBSD which in practice has more in common with a Mac OS than with a Windows OS. And all these OSs have their roots in Linux on some level. Yet we can't even have a decently functioning browser. I have an old laptop that has 2GB of ram and can run chrome/Firefox perfectly which are way more fleshed out browsers than we even have in these consoles. 

What I really don't get tho is this; these consoles clearly partition their RAM into two pools. System Ram and App Ram. Eveey App (game or otherwise) made for the PS4 for instance will at all times have access to the exact same amount of RAM. ALWAYS. So how in God's name is it possible for my browser to crash when it has access to at least 5GB of Ram just for itself? 

The RAM is used for NSA audio and video file cache.

Care to elaborate?

And if by video file cache you mean Game DVR.... why would they need to use extremely expensive system ram for someyhing that records automatically and when eveey console comes with a HDD. 

Its like recording a video on your smartphone. That video isn't being saved in RAM. it's going directly to storage. 

Furthermore, whats the size of the saved video. Whats its bitrate? No matter what it is i doubt a cache of anything more than 150MB is needed to hold the video for however long it takes the system to move it on to the HDD with the assumption that such a technique is required due to however slow it may be writing data from system ram to the internal HDD. 

i give up you win :P

In the Xbox's case... (I can't say much about the PS4 as I haven't cared to look into it...)
It's not just running a single Operating System.

It's running the Xbox OS which is used for the games.
It's running the Windows derived OS for the general UI and back-end stuff.
It's also running the Xbox 360 OS.
It's all done via virtualization of course, so it's extremely flexible.

One thing to keep in mind with the Xbox 360 OS though was it kept only the bare essentials loaded into memory, the Xbox One tends to load everything it needs for the UI into memory... The end result is that you will simply bump into less "loading" whilst looking through your Xbox One compared to the Xbox 360.
It also allows for snapping and to load a game+app at the same time.

The Xbox One's UI is also rendered at a higher resolution, uses higher quality video and audio.

Because with Windows you don't need such tight constraints on memory usage, games expect to have a certain amount of Ram available, we cannot have background apps/elements eating into memory reserved for games, can we?

It's not that a console can't... It's by design. Console controllers aren't very good at multi-tasking.
But the Xbox One will keep your game state saved in the background whilst you web-browse or watch Netflix etc'.

Good question. I guess it's because Microsoft and Sony wan't things to meet a certain degree of quality, expectation and usability.

Microsoft is travelling down this path with the Universal Windows Platform.

In the Xbox One's case. It doesn't have 5Gb for itself, the browser uses the memory reserved for the OS/App memory partition and you can switch between an game and the browser and both will be loaded into memory.

****
In regards to the PS4 though, it's more wasteful than Microsoft's implementation. (Microsoft is really flexing it's OS know-how with the Xbox One.)
For instance it uses 3Gb+512Mb then it has a seperate ARM Chip + 256Mb Ram for background tasks and OS features.
The PS4 is thus using at-most 3.75Gb of memory compared to Microsoft's 3Gb.

Both consoles as far as I know cache Game DVR to Ram before committing it to the Hard Drive.
The reason why you can't use Android in this example is because Android isn't using Mechanical based storage that could also be streaming textures or other assets at the same time.

Once you start writing lots of files to a Mechanical Hard Drive... They tend to grind to a halt as far as speed is concerned... This is compounded by the fact that both consoles launched with pathetic 5400rpm drives, which is always going to be the lowest common denominator that Developers need to think about.

1. What does the console really do with that 2.5-3GB of reserved RAM? Besides multitasking with other apps and constantly recording/streaming while you play, I imagine much of it is a precaution to not repeat the situation last generation with tiny memory budgets severely hampering new capabilities. They're reserving more than they need in case demand for something useful but intensive comes along in the generation. We may see more memory freed up for games soon as that 'new thing' hasn't seemed to appear.
2. Why is it that we have operating systems that are leaps and bounds more functional than what we have in consoles which run on significantly less memory. (we can have an entire windows operating system on as little as 2GB of ram. Kinda relates back to #1, and consoles are supposed to be about focused, closed, simple design, not massive versatile functionality. A console OS might not need all that memory, but neither do 1080p games.
3. Why can my android phone keep my game state saved in the background for any number of apps or games I'm playing yet my console can do this for only one game at a time? Stability. Your console's running far more sophisticated and demanding games and probably crashing a lot less doing it.
4. Why are features so hard to implement and take forever to come along when everyone that owns the console is using the exact same OS and running it on the exact same hardware? A bit miffed at that myself, but I suppose the OS teams for these console manufacturers are still relatively small. That said, some updates are quite substantial and it's not like major Android/iOS/Windows updates are any faster.
5. Why can we not use the consoles we have to build "small" apps for the console? Closed ecosystem. Just the nature of the beast.

Those are my best guesses, anyway.

1 - My theory is that because devkits only have 8 GB too. This 8GB model we have was supposed to be the 8 GB devkits used for 4 GB consoles before they decided to give 8GB to devs. They reserve a lot of ram because the devkits need it to properly work. Impossible to develop games with 7GB for instance without the devkit debugging software so no game can use 7 GB of ram (until they give devs some devkits with 12 or 16 GB of ram).

3 - Technically PS4 can store the state of a game while running an app too. Try to start spotify while playing a game, your game will be put on standby automatically. But the game will need all the memory it needs + a good portion of CPU and GPU ressources, even in standby, so you can only do it for one game. A PS4 isn't a phone, it's not meant to run 10 (small) apps in the background, remember that a game always need to be run on the background even if your are in the main menu. But actually the PS4 can run at least 2 apps and one game simultaneously: playing spotify in background + backgrounded game + foreground app.