Re: How and why the trisynaptic circuit of hippocampus is good for memory?

This reply comes from Dr. J. Horowitz, Professor Emeritus of the University of 
California

At the cellular level, memory is often associated with
long-term-potentiation, LTP (although this is still an area of debate).
LTP can occur at all the synapses in the trisynaptic circuit, and hence the
transmission of signals along the circuit can be modified as new "memories"
are laid down.  The "function" of the trisynaptic circuit is thus, as noted
in the question, to get signals into, through, and out of the hippocampus.
Actually, the circuits are a good deal more complex, e.g. there are
recurrent collatorals and many inhibitory interneurons modify activity. In
the intact animal, the theta rhythm (driven by signals from the septum)
excites cells synchronouosly, thus, the situation is
even more complex.  The bottom line is that the exact relationship between
memory and the basic trisynaptic hippocampal network is unkown, although
since the Hebbian synapses have been identified all along the trisynaptic
circuit one can speculate that modification of synaptic strength somehow
may play a role in mnemonic mechanisms.