Even though our short-term memory often seems much clearer than distant recollections, long-term memory may not be as fuzzy as we think. According to Scientific American, a recent study by MIT cognitive neuroscientist Timothy F. Brady and his colleagues demonstrates the human brain's ability to store incredible numbers of details over time:
In their work, the researchers asked subjects to try to remember 3,000 pictures of common objects—including items such as backpacks, remote controls and toasters—that were presented one at a time for just a few seconds each. At the end of this viewing phase, the researchers tested subjects' memory for each object by showing them two objects and asking which one they had seen before. Not surprisingly, subjects were exceptionally good (more than 90 percent correct) even though there were thousands of objects to remember. This high success rate attests to the massive storage ability of long-term memory. . . . The subjects were just as good at telling the difference between two pictures of the same object even when the objects differed in an extremely subtle manner, such as a pair of toasters with slightly different slices of bread.
Those results don't explain why we end up forgetting things in the long run, though. On that point, the Scientific American article says it's our "voluntary searching mechanism that's prone to interference and forgetfulness." While the subjects apparently have little trouble identifying objects they've already seen, then, they might not be able to actively recall those objects without any visual reminders.