Interaction of other software with RAM FS

How does other software interact with the RAM File System setup in Windows if its drive isn't formatted as NTFS? I see that it gets a drive letter.

One such use-case for me is I use RAM disk as a Plex transcode drive. I also use it for RDS profiling server side. Both cases are used to reduce writes on SSDs as well as to increase performance.

Also when the files disappear, does this reduce the RAM usage (dynamic like RAM disk) or is it a set block?

RAM File System is a real kernel-mode file system driver, so the volume appears as an ordinary local drive with a letter, and other applications use it through the normal Windows file APIs with nothing to configure. It reports its file system name as "NTFS" (to increase its recognition by other software) and implements NTFS behaviour - ACLs, reparse points, hard links, sparse files, extended attributes, oplocks and change notifications. Nothing above the driver can tell the difference.

Plex transcoding is a straightforward fit.
For RDS profiles, there is one caveat: the contents live in RAM and are gone on reboot or power loss. If you want that data to survive, you should attach an image file when creating the volume and tick "Save contents to the image at shutdown". However, as a crash would lose the changes made since the last save, it's best to treat it as an additional convenience rather than a guaranteed backup.

Memory use is dynamic. RAM is committed as data is written, and released as files are deleted. The size you set is a ceiling rather than a reservation: a 20 GB volume holding 2 GB of files uses about 2 GB. After deleting a lot of data at once, the used space figure may settle only a moment later, as the driver keeps a few freed blocks for reuse.