When we provision CPU resources, which is the number of vCPUs allocated to run the VMs, and if its number is greater than the number of physical cores on a host, it is called CPU overcommitment. CPU overcommitment is a normal practice in many situations as it increases the consolidation ratio. Nevertheless, you need to monitor it closely.

CPU overcommitment is not recommended in order to satisfy or guarantee the workload of a tier-1 application with a tight SLA. It may be successfully leveraged to highly consolidate and reduce the power consumption of light workloads on modern, multicore systems.