Websites that you have opened in tabs in your favorite browser use system resources as long as they are open. Some may even be active in the background. Facebook for instance displays the number of notifications in the title tab, and some other sites might play music or a video in the background. This all sums up, and if you have a lot of tabs open, you may feel the strain especially on slower systems.
TabMemFree for Chrome does what BarTab did for the Firefox web browser. It automatically puts websites that have not been active for a specific amount of time in sleep mode. This mode unloads the website from memory to free up system resources.
The extension does this by forwarding the tab to an empty page. This happens in the same tab of course, and is indicated to the user by a title change only. Websites can be reactivated with a click on the tab. This basically loads the website anew in the tab. The downside here is that it may take longer for the website to be displayed, as it needs to be loaded and rendered again in the browser.
Tabs that have been put in sleep mode this way stay in the mode even if the browser is closed and opened again. This can have a positive effect on the Chrome browser's start-up time as less websites need to be loaded.
The extension is currently marked as beta, which means that it may be unstable on some systems. The developer notes that users may experience issues with the extension, like losing form data on tabs that go into sleep mode or music or video playback being interrupted when it is coming from a tab in the background. (via Addictive Tips)
TabMemFree currently offers no whitelisting of websites or tabs that you do not want to unload after some time of inactivity. It is likely that the feature gets added in a future version of the extension.