We present a novel computational model of the active buffer of working memory (WM). The model uses synchronous oscillations in order to bind an item and its corresponding context into one representation, while asynchronous oscillations are used to separate the representations. Due to the bindings, the model can ascribe proper meanings to items, as demonstrated by the replication of the effective rejection of distractors. The model predicts the inherent limitation of WM capacity in range of 1 to around six items that arises from the trade-off between the number and stability of separate oscillations. This trade-off depends on the strength of lateral inhibition exerted. The systematic variation in inhibition led to the exact replication of capacity distribution observed in a large sample, as well as to the prediction of a few novel capacity-related experimental effects. Finally, we showed that the differences in capacity can underlie the differences in a more complex ability of detecting relations governing a pattern of stimuli, called relational integration, which is known to be strongly related to the effectiveness of higher-order cognitive processing.