Calculated the 128^3 size from the 2MB map size. I myself rarely play minecraft (because it is highly addictive and I have a life to live )
I think the main problem with Minecraft is the fact that it is written in JAVA. I imagine (again I don't know for sure) that each block is an object w private data of its position, orientation, texture, whatever, so it is waaay more than 1byte / block, hence the big memory consumption. Also, easy to write the code, but horrible to render the graphics. Last time I checked JAVA was awful with memory handling. I also guess that there is no 3D-acceleration in the game. Fact is that my Core i5 machine while does not lag, uses 100% CPU while running the free beta, that should never happen with a game. A C++ rewrite and the use of 3D accelerators should make this game run smooth on any machine. So again, I admit I'm not the hardcore Minecraft fan, but given what I see this is the problem with the game and is why I said it should run on an i486.