[Q] Use of ROM (Memory) in Android Devices

I am going to ask very basic question regarding ROM in Android Device.

Searched for Android Devices and found as below (different devices):

1) Memory - 1 GB RAM, 4 GB ROM

2) Memory - 1 GB RAM, 8 GB ROM

3) Memory - 1 GB RAM, 16 GB ROM

because of ROM size, prices are different from one another.

Is it just the normal internal memory which they are labeling as ROM, or does it have a different purpose altogether. Because once phone is up and running the OS is loaded in RAM and not ROM.

If OS is installed in ROM, it may occupy 1 or 2 GB, what is the use of remaining space.

1) user can install app of his/her choice
2) app data storage
3) cache / delvik cache
3) anything else

if someone purchase with Memory - 512 MB RAM, 4 GB ROM, what approx Internal Storage he/she will have to install apps?

I would appreciate your help and response.

Regards.