A fixed size
The context window is the maximum amount of text the model can hold at the same time, and it includes your prompt and everything the model writes back. Once you're at the limit, nothing more fits.
It fills up
As a conversation grows, the window fills. When it's full, the model can no longer see the earliest messages, which is why long chats start forgetting the beginning. Short prompts and summaries buy you room to keep going.