Similar situations have often arisen in the history of computing, when hardware intended to have up to a certain level of resources is designed to handle several times the maximum expected amount, which eventually becomes a severe restriction as Moore's law increases resources economically available.
Similar successive restrictions in size have been imposed and overcome on hard drives.
Thus, installed hardware devices need some of the address space in order to communicate with the processor and system software.
Which part of physical memory becomes replaced with the device communication space depends upon the machine, but it is usually anything above 2.5 to 3.5 GB.
On a 4GB host, and in the absence of one or another additional workaround, PAE does nothing for accessing the ~1GB memory overlapped by the PCI I/O.
[2] Many versions of MS Windows can activate what is still called PAE for the purpose of using the NX bit, but this no longer extends the address space.