When you power on a virtual machine, the system checks the amount of CPU and memory resources that have not yet been reserved. Based on the available unreserved resources, the system determines whether it can guarantee the reservation for which the virtual machine is configured (if any). This process is called admission control.
If enough unreserved CPU and memory are available, or if there is no reservation, the virtual machine is powered on. Otherwise, an Insufficient Resources warning appears.
In addition to the user-specified memory reservation, for each virtual machine there is also an amount of overhead memory. This extra memory commitment is included in the admission control calculation.
When the vSphere DPM feature is enabled, hosts might be placed in standby mode (that is, powered off) to reduce power consumption. The unreserved resources provided by these hosts are considered available for admission control. If a virtual machine cannot be powered on without these resources, a recommendation to power on sufficient standby hosts is made.