The A1181 MacBook designation was around for several years, and there's a lot of variation in capabilities between the eight(!) generations.
If the Macbook is either the Mid 2007 generation (May-November 2007/MacBook2,1/EMC 2139/2.0 or 2.16GHz Core 2 Duo/Intel GMA950) or the Late 2006 generation (November 2006-May 2007/MacBook2,1/EMC 2121/1.83 or 2.0GHz Core 2 Duo/Intel GMA950), then you may install 4GB of RAM, but the machine will only speak to 3GB of it. This is a limitation of Intel's supporting chipset. Later generations have a later chipset that's crippled in the same way; you can install 8GB, but the machine will only see 6GB. If you're buying RAM for one of these machines, don't buy 2x4GB; buy 4GB+2GB instead. For the 3GB systems, 2GB sticks are cheap enough that it doesn't matter.
All MacBook generations after the original MacBook1,1 Core Duo 1.83-2GHz one will run OS X 10.7 (the original MacBook will only run 10.6.8). The three generations shipping in 2007 top out at OS X 10.7.5. The only A1181 MacBooks that will run 10.8 or later are the Early and Mid 2009.