I'm not entirely sure. Definitions suggests it is where an Operating System, (in your case Windows 7), is unable to release RAM when some application or other is closed. There is more information on memory leaks here;
It is not entirely the fault of the OS. Software writers should arrange their applications to free up memory when the application are closed, but often they don't bother, and so the application's data remains in memory until a reboot. A reboot clears all RAM.
But is this a problem? We can't say on your system because we don't know how much RAM your computer has.
There is a general misunderstanding about memory usage. People often think that high RAM usage is bad, but that is not necessarily the case. If RAM is not utilised then it just sits there, unused. For example if your system has 8 GB of RAM and memory usage is at 50%, then 50% of the RAM is not being used; that's 4 GB of RAM not being used. Surely that is not good?
Many retail computers nowadays have between 2 GB and 4 GB of RAM. For normal usage, eg internet use, watching videos, managing emails, documents, photos, listening to music, and so on, even 2 GB of RAM is plenty and will rarely be fully utilised. Windows 7 is a more RAM hungry OS than other any other Windows OS; It has more Processes and more Services running in the background, but even so, it's own memory usage is nowhere near the amount of RAM supplied in today's systems. However, if this is an older system with limited RAM, that has been upgraded to Win 7, then the new OS may indeed use a lot of the available RAM. But generally it is only when RAM extensive applications are used, for example, video editing, graphic design, and so on, that RAM usage can soar.
You say that 'performance is dragging', and although you don't go into detail, the causes for that can be many. For example;
1] Malware infection. The biggest culprit in slow performance systems is viruses and other malware.You should always use a firewall and an anti-virus scanner of course, and the anti-virus should always be kept up to date, should always be running in the background, and should be scheduled to run regular, (daily if possible), full scans. But anti-virus is not enough nowadays and we also need anti-malware scanners. Some combinations are toxic. For example the old favorites like an AV, (anti-virus), with Spybot Search & Destroy or with Lavasoft's AdAware, no longer work well because they often conflict with the AV. So we need stand-alone manual scanners like Malwarebytes' Anti-malware and/or SUPERAntiSpyware to run regular manual scans, but not in the background, and not daily.
2] Start-up programs. Having too many applications load on boot-up, (start-up), will slow boot-up and will unnecessarily use RAM. Reducing the number of applications that load at Start-up can greatly speed up the start-up process, and will keep RAM free for other uses. Windows has it's own utility for controlling start-up programs, called the System Configuration Editor. To use it, goto the search option in the Start bubble and use the search option to search for Run.The results will list in the start menu. Click on the Run it finds and in the new box type in MSCONFIG and click OK. In the "System Configuration Editor" window that appears goto the Startup tab and investigate the entries there. Remove any ticks for applications that you don't need to load at start-up, eg any media players, any instant messengers, any browsers, etc; anything that you can just as easily open when you actually require it.
3] Perhaps the easiest way to release memory is to shut down when you are not using the system.
4] If you mean that browser use is slow, then review the Add-ons your browser is using. Too many, or add-ons that are suspect, can affect browser use.
5] Disable any unwanted or un-needed Services. There's no easy way to do that except to work down the Services list in the Services Console, (do not use the MSCONFIG Services tab for this), and check what each service is and whether it can safely be disabled or set to manual. However, Black Viper has his own list of Windows 7 Services which will help the decision process.
6] Ensure that the system is set to manage the Page File, (Virtual Memory), itself, and don't input your own limits.
That is just some of the steps that can be taken to improve performance. I hope it helps.