the function malloc( )

The memory space which malloc() allocated memory from is called the heap.

By default this is located immediately after your BSS section (which goes in the memory specified as rwdata in the GUI) and continues until it gets to the end of the memory or until it reaches the stack.

If you want more information then please look in the altera_hal source code for the the function sbrk() which is what malloc() uses to get more memory to allocate.