by Howard Miller.
Exactly what it says... edit php.ini, change memory_limit to something bigger (128M say) and restart the web server. Which bit don't you understand?
If you don't know where php.ini is, you can write a short script called test.php in the root folder of your Moodle install, containing this one line
<?php phpinfo();
...run http://localhost/moodle/test.php (adjust for the actual url/location of your installation) and you should get a very long page of information. The effective php.ini is stated in the first block of info.