it also depends on the device. mine is extremely limited on RAM and i've upgraded from Froyo to Gingerbread via root which makes it worse. my phone only has 256MB RAM and normally on a higher end device with much more, no one should have to worry about what is running. but on lower end or older devices, the more apps you install, the more memory they attempt to use. since i use Go Launcher along with its many plugins, whenever too much runs, Android tends to kill my launcher causing further problems, because the launcher runs as an app, and if i tick the option to prevent that, the phone will eventually auto-reboot whenever it runs out of memory (yes it is possible, 256MB RAM, and fifteen apps use all of it, another app tries to load in the background for notification, and the phone simply reboots because it can't kill enough to spare). normally Android shouldn't use more than 85% of the RAM. the problem is whenever you got too many apps fighting for space in RAM, and Android tries to go on a killing spree and kills important stuff to compensate, eventually it kills the wrong one and it reboots. as a result, i installed Go Task Manager's premium version and have it set to kill only apps that i haven't whitelisted or use, whenever it reaches the 86% mark, it does so. i have whitelisted all system services, system apps, the launcher, Google Play and far more. as a result it is far more stable, although it does still tend to lag if i am doing too much with it.
To answer the OP's question, Android is the exact opposite of Windows. Windows chokes if even so much as 50% is used up, not sure if that has been fixed as of Windows 8 as i cannot kill it no matter what, but Android only runs efficiently if it is always running in RAM. if an app shuts down, or if Android kills it to make more for another larger app, you will notice a delay if you try to restart that app later, by a blank screen which displays up to a couple minutes before you actually see the app. in a worse case scenario, you may get 'Sorry! The application [name here] is not responding [force close] [wait] [report]' if it takes too long. normally clicking the 'wait' a few times will succeed, or if the memory is just too far gone or used, the phone auto-reboots. i wish i could disable those prompts as 90% of the time it would work perfectly fine without needing me to click 'wait' over and over again. so annoying.
the idiom 'Free RAM is wasted RAM' is something dating back to UNIX, then Linux, from which Android is built off of.