3D NAND memory operates by creating a vertical stack of memory cells, as opposed to traditional 2D NAND where cells are laid out in a planar fashion. Each cell is essentially a floating-gate transistor that stores data by trapping electrons. The use of advanced nanolithography techniques allows for the precise placement and layering of these cells. By stacking the cells, manufacturers can increase the memory density without expanding the chip's footprint, making it highly space-efficient.