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The compiler does nothing. The operating system itself controls that aspect.
Also remember that your code is undefined and is not and never guaranteed to "inherit" some memory previously used.

main( )
{ struct animal
{ char name[25];
char breed[25];
int age;
} *pet1, *pet2;

First, main returns int: http://cpwiki.sourceforge.net/Implicit_main
Secondly, please avoid...