10.7.5 definitely will reduce swapfile size when programs free up memory.
Today, for example, I was at 8 GB of swap file, and now I'm down to 4 GB.
Earlier versions would not; at least as recently as 10.4, and I think 10.5 on
the PPC, swapfile space would only be reclaimed if everything after point X was
free. It would not compress the swapfile, but instead relied on everything
going away. Naturally, that didn't happen often.
I consistently find that if I log out, and log back in, swap used is down to
around 250 MB, yet for whatever reason, the swap files (there are more than 1)
will never go below 1 GB of disk space.
I agree, more memory is the answer. The better question is why; why not run
happily in 16 MB inside a pizza box?
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