This is obviously a philosophy of the mind question, so I hate to bring science into it, but I do remember reading that memories are more like reconstruction than retrieval. Over time, the more insignificant memories degrade in their reconstruction, as the neurons and synapses are repurposed for new memories. However, from what I understand, every memory still exists in the brain, just in more fragmented, harder to put together ways.

In terms of philosophy of the mind, I'd imagine a dualist would say something about memories disappearing into the non-physical world. A materialist might be closer to the scientific explanation.

You were right on the money about how they decompose to be repurposed.

When you talk about the rare nature-explaining philosopher, do you mean subscribers to the Type-Indentity theory? I'm interested to see what you think of people trying to explain what those mental states are made of physically.