The xip (execute in place) applications are downloaded and executed from external flash.
The non-xip applications are executed directly from RAM. In Keil, you don’t actually download the application to the flash. You can build the application and directly execute it from the IDE using the “Start/Stop Debug Session” button.
Refer to: http://www.keil.com/support/docs/2831.htm:
Note: you cannot use the command Flash — Download for RAM areas in your application. The RAM content will be downloaded when you start the debugger.
Note: If you run a non-xip application on MCUXpresso IDE, the application is stored in external flash but it's executed from RAM. This is configured in the project's options.