Most failures in production AI agents are not purely model failures. They are often context failures: stale retrieval, bloated prompts, inconsistent memory, recursive tool loops, and hidden state spread across vector stores, chat history, workflow systems, and agent orchestrators. This session presents a systems architecture approach to agent memory. We will break down the main memory layers in modern AI agents, including short-term context, episodic memory, semantic memory, procedural memory, and external state. Then we will examine why more context does not always improve reliability, and how unmanaged context can increase latency, cost, and failure rates. The core of the session is a practical framework for controlled forgetting. Drawing from distributed systems patterns such as cache eviction, TTLs, log compaction, snapshotting, and state reconciliation, attendees will learn how to design agents that remember the right information, discard stale or irrelevant state, and remain observable as workflows scale. Attendees will leave with a reference architecture for context engineering, concrete failure modes to monitor, and implementation patterns for building reliable, cost-aware, stateful AI systems.