When we remember something, the neurons in our brains communicate with each other in a particular way. The chemical and sometimes even structural changes that occur create a pathway called a memory trace.
Signals traveling along these traces are what allow us to remember things. When the chemical changes first occur, they create short term memory, or things we remember for only a brief time.
But short- term memory can become long term memory if the memory trace is activated enough so that it creates a long-term pathway in the brain. This process is called consolidation.
When something interrupts the memory-storage process--like a hard knock to the head--newly formed memories aren't stored for the long run and you can't remember things that just happened. This is called anterograde amnesia.
Retrograde amnesia is when you can't recall things from your long term memory either. Luckily, in many cases of amnesia memory eventually returns, although the incident that caused amnesia is often never recalled.