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My guess is that it's combination of both hardware and software. Most of the smarter/better programs will be able to tell exactly how much ram is on the card by actually seeing the ram on the card. The more "dumber" programs will do a quick scan of the video card, and give you an answer based on what the card tells it. If the bios on the card says it's a 512mb 8600GT, then the program is gonna report that back to you... even if it's not a 512mb card. Also, some programs have a set list of cards in their database, and when they check your card they bring back a listing from their database of cards. Problem is that if the list is too old, or doesn't have your specific card in the list (or supported series), it will bring back an answer based on what it thinks your card has compared to a similar card in the series.
In the case of GPU-Z, it's one of the smart ones. You can see that the program is current, and if you go through the list of changes you can see the amount of updates for specific cards, and the listings on how it detects things.
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