I believe it does. Excel, by default assumes a variable to be a variant unless it is declared as a specific variable type (e.g. As String, As Double etc). And since a variant is of an unknown variable type, Excel allocates it maximum memory so that it can then be used to store whatever is passed to it.
This link gives a decent overview of the different variable types and probably a better explanation than me!
<html>http://www.ozgrid.com/VBA/variables.htm</html>