TEXT vs VARCHAR

hello.

i am faced with a situation where i must store a potentially large ascii
string (several thousand characters?).  i am looking for some insight beyond
what the documentation offers...

is there a limit on the upper limit of a VARCHAR?  i cannot find one in the
documentation.

is it true that a TEXT field can be any size?

what is the best way to manage memory?  for example, if i declare it as
VARCHAR(10000), does that mean that memory for 10,000 characters will be
allocated whether i use it or not, or is it dynamic?  how about the TEXT
type.

thanks
chris