[Originated in a comment over on thesession.org]
Though, at an early stage of developing a repertoire, it can seem essential to remember every last tune you learn, and to be able to bring it to mind and to start it unaccompanied, as your repertoire grows, and your circle of playing acquaintances expands, remembering every last tune may come to seem less crucial. There are people who know 2500-3500 tunes, can recall their histories and the circumstances in which they were learned, and can bring them to mind without prompting (Paddy O Brien of Minneapolis is one, Grey Larsen is another), but these persons, in my observation, are in the minority.
It seems to me more common that most people who learn a lot of tunes do not recall all the tunes learned: there will be a large body of tunes you have learned over the years, with a smaller subset of tunes that you recognize when heard, a still smaller subset that you can join in when others start them, a still smaller subset you can start on your own or can bring to mind unprompted, and the smallest subset will be whatever tunes are your current favorites and which you currently most enjoy. All of these nested subsets have interplay with each other, but most players do not command all these tunes to the same degree at a given stage in their development.
Players with good memories and very quick ears get to a point where the distinction between "pulling a tune out of the memory" and "learning a tune on the fly" begins to disappear. I cut my teeth playing with people who could listen on the first iteration, finger along on the second, and by the third iteration of the tune be playing along. When asked if they already knew the tune, these people tended to say "well, I've heard it." Does this mean the person had learned the tune under the fingers, forgotten it, and then been reminded in the session? Or did it mean the person had *not* learned the tune under the fingers, but had honed the ability to pick up tunes on the fly--in short, to PLAY WHAT THEY HEARD--to an extent that "remembering" the tune versus "learning it on the fly" was largely erased.
Particularly in session playing, it seems to me, it doesn't so much matter whether you can recall 95% of the 500-1000 tunes you know. It is more important to be able to recognize tunes and join in when they are started by others. This is one of the reasons that I prefer to go to sessions with unfamiliar musicians--because I can be assured of hearing tunes I've forgotten, or never heard. Thus these sessions have a much higher incidence of challenge and discovery. This is also why I appreciate the people I play with regularly, because they work hard at learning new tunes and bringing them into the mix.
So the more long-term takeaway goal might be, not "how do I remember every tune I've ever learned," but rather "how do I hone my ability to pick up tunes on the fly, remember them when prompted, and join in swiftly?" When you get to this point, the process of building a repertoire becomes very different: you're no longer agonizingly counting up tunes in your lists, sitting in the session hoping that people start tunes you know, or waiting to pounce on moments of silence so you can start your tunes on your own.
At this stage, the session becomes much more like a conversation, or a poetry slam, or a storytelling session--where you are no longer worrying about whether you have the physical skills to play what you hear. Those skills (the ability to hear something, played by another or playing in your own head, and immediately or at least swiftly be able to bring it out of your instrument) are already taken care of, and you can concentrate on the beauty and unique eloquence with which each individual person expresses her/himself.
This also connects us to older, more vernacular and memory-oriented models for sharing, teaching, and passing-on culture. It is not dissimilar to the techniques of memorization and rhetoric that both Cicero and Aquinas described. The ancients, and the vernaculars, knew a lot about communication and memory that we hyper-literates have forgotten or eroded.