A card in the internal memory card slot doesn't get pooled with the 256MB of onboard flash.

The control panel has an option to use the internal card for swap (virtual memory). And you can set applications to use the internal card slot to store downloaded maps and such.

But if you're ambitious, you can configure the N800 to use the internal slot as the system drive, inplace of the onboard flash. Look up "booting from mmc".