Memory overcommit is a process in which a virtual machine (VM) is assigned more memory than a host machine's available and committed physical memory. It is used in virtualization environments to allocate memory capacity to VMs with higher requirements.
Techopedia explains Memory Overcommit
Memory overcommit is achieved through the hypervisor that sources physical memory from the host computer and distributes it to different virtual machines. Memory overcommit works on the principle that most virtual machines underutilize their allocated memory capacity. Thus, the unused memory capacity of other VMs is assigned to a VM that requires additional memory. The hypervisor routinely monitors each virtual memory operation and dynamically assigns unused memory to resource intensive VMs.