Why do some default kernels not support large ram capacity? I noticed than when I have over 1GB of RAM on a workstation or server and the kernel will only display 886MB's of RAM. I know for a fact that it has 2 GB of RAM so I get very confused. Is there a reason for this? I know in the past upgrading to a more recent / testing kernel will resolve this.

Any input?

If I'm correct, you need to enable a specific kernel module (if that's the right word) to be able to install more memory than some small amount (like support over 4G of ram). It increases kernel size, and my logic is that if something is not needed, it shouldn't be in the kernel.

I notice that many can't even detect 1GB of RAM. Is that normal?

Yes it is on a 32bit machine you need to patch the kernel with what is called I believe the lomem patch this allows a 32bit machine to access the full 1gb as low memory or if needed a kernel with HIGHMEM enabled in the kernel config for > 1gb memory.

How exactly do you "patch" a kernel to support this?

Same way you patch any kernel get the patch that applies to the source version you are using then change into the kernel source directory and patch -p1 < /path/to/patch/file then configure and compile the kernel preferable using the kernel-package method since I see you use Debian. A real easy way to get the support is to look for the Con Kolivas patches when using older kernel as I believe it (lomem patch) is included in the mainline kernel now. Did a quick search apparently it is a config option in the HIGHMEM section to use 1gb as low memory from at least 2.6.16 according to this page.