ESX employs a share-based allocation algorithm to achieve efficient memory utilization for all virtual machines and to guarantee memory to those virtual machines which need it most

ESX provides three configurable parameters to control the host memory allocation for a virtual machine

• Shares
• Reservation
• Limit

Limit is the upper bound of the amount of host physical memory allocated for a virtual machine. By default, limit is set to unlimited, which means a virtual machine’s maximum allocated host physical memory is its specified virtual machine memory size

Reservation is a guaranteed lower bound on the amount of host physical memory the host reserves for a virtual machine even when host memory is overcommitted.

Memory Shares entitle a virtual machine to a fraction of available host physical memory, based on a proportional-share allocation policy. For example, a virtual machine with twice as many shares as another is generally entitled to consume twice as much memory, subject to its limit and reservation constraints.

Periodically, ESX computes a memory allocation target for each virtual machine based on its share-based entitlement, its estimated working set size, and its limit and reservation. Here, a virtual machine’s working set size is defined as the amount of guest physical memory that is actively being used. When host memory is undercommitted, a virtual machine’s memory allocation target is the virtual machine’s consumed host physical memory size with headroom