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Remembering an actor event must often be casually connected in an appropriate way to the past experience being recollected. There are different types of memory such as habit memory, procedural memory, propositional memory, episodic memory, and semantic memory.
One theory of forgetting is the Decay Theory, which is defined as the occurrence of spontaneous loss of information over time. Studies measured the loss of information over time in the waking and sleeping states. The loss of information was significantly less in the sleeping state and leveled out to a plateau of retention, while loss was greater in the waking state and had a significantly steeper downward curve.
From what I have read, one of the reasons that we forget is that connections (synapses) between brain cells deteriorate, at least in the more severe forms of forgetting, such as Alzheimer's disease. There are probably many reasons that we forget things, but to the degree that we forget things permanently, I suspect that the most important explanations will prove to be biological, especially as we learn more and more about the human brain.
The Levels of Processing Effect (Lockhart and Craik) might suggest that we forget because we have not processed understanding on a deep enough level. We may have memorized something at a surface (or shallow) level, but for lack of making a deeper cognitive connection (such as applying knowledge in a new way) we forget the new piece of information.
The Atkinson-Shiffrin theory is more familiar. They proposed the idea that humans store new information in our sensory, short term, or long term memory banks. Sensory memory lasts only long enough for one of our five senses to process what were are seeing, hearing, smelling, etc. Short term memory kicks in when a piece of information is used, usually immediately (such as dialing a phone number). Long term memory is when information goes from storage for a few minutes, to storage for a lifetime. We are much more likely to forget things stored only in our sensory or short term memories, whereas long term memory banks store information that we can recall, hopefully, for life.
I am not sure I am aware of all the theories, but one which is interesting to me is that of repression. This is a term given to the way in which the body chooses to forget particular memories that are particularly painful or disconcerting. For example, a victim of abuse may have repressed scenes when they experienced abuse.
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