The router contains a CPU like your computer and runs its own operating system which is stored in "flash ram". The operating system in the router is known as "firmware" which is a bit of a misnomer these days because it can be changed.
Once upon a time firmware was stored in ROM (read only memory) or EPROM (erasable programmable read only memory) and was thus "firm" because it could not be changed or at least not by an end-user (you need to use a Ultra Violet source to erase an EPROM).
As manufacturers started launching products which needed to be upgraded more often and by end users, they moved to using EEPROM (electrically erasable programmable read only memory) chips.
These days, though, most seem to use "flash RAM" chips possibly because they are cheaper, but maybe also because an EEPROM can only be erased around 1,000 times, but flash RAM can be erased around 10,000 times. Flash RAM also has the advantage that it can be erased in targeted "blocks" whereas with an EEPROM, the whole chip must be erased and the erasure process is slower because it is erased serially one byte at a time (re-programming an EEPROM is also slower because it is also done one byte at a time).
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