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There are different types of memories so it is hard to characterize all of them in one go. Consider how different your memory of a visual scene is to your memory of a smell. They use very different mechanisms if we example them at a neural level.
But in general I would say your stores things in an associative way. You aren't storing the input directly, you are mapping the input as a recombination of things you already know. So there is a lot of information loss in that process, but hopefully you are retaining the salient parts.
Another thing to consider here is that your in the moment perception may seem very sharp and precise, but its actually not at all. Your brain is doing a lot of filling in the gaps.
