The tool has exhausted the system's available memory and is unable to continue processing.
Common sources of memory problems often stem from working with data that includes extremely large features. It is recommended that these features be broken up into smaller features. A polygon road casing for an entire city and a polygon representing a river estuary are examples of very large features with many vertices. This error can also happen if a second application is running while a tool is processing. This second application could adjust the available amount of physical memory and render the boundary calculation of the currently processing tile as incorrect, causing the tool to demand more physical memory than is currently available. It is recommended that no other operations be performed on a machine while processing large datasets.
If the tool was executing in the background, you may want to try executing the tool in the foreground, as described in Foreground and background processing.