This setting increases PHP Memory only for WordPress, not other applications. By default, WordPress will attempt to increase memory allocated to PHP to 40MB (code is at the beginning of /wp-includes/default-constants.php) for single site and 64MB for multisite, so the setting in wp-config.php should reflect something higher than 40MB or 64MB depending on your setup.
WordPress will automatically check if PHP has been allocated less memory than the entered value before utilizing this function. For example, if PHP has been allocated 64MB, there is no need to set this value to 64M as WordPress will automatically use all 64MB if need be.
Please note, this setting may not work if your host does not allow for increasing the PHP memory limit–in that event, contact your host to increase the PHP memory limit. Also, note that many hosts set the PHP limit at 8MB.