You have 1GB of space on which to download, unzip and install apps. If you move them to the SD card later (or have the phone set to install to the SD card), you still initially need the internal space to install an app.
Even if you move apps to the SD card (not all of them can be moved, because not all apps will run from the card; of those that can be moved, some of them won't run from the card, but the "developer" [a script kiddie at best] didn't know to not let the app be moved), only parts of it get moves, and there's a link in internal memory to where each part was put on the SD card (because Android looks in what's mounted as app storage, which is internal by default). It's possible, if you understand Linux well enough, to rewrite vold.fstab to mount the SD card as the app installation partition, but mmc (the internal storage) actually handles apps better than SD (the card).
Bottom line is to get a phojne with enough internal storage, and use external storage for storing data, which is how Android is designed.
"Working memory" may refer to RAM, internal ROM or app space, it's a meaningless term in a situation like this. (It's probably referring to internal ROM - where apps keep their data, and not space that you can use to install an app.)