Ballooning is part of normal operations when memory is overcommitted. The occurrence of ballooning is not necessarily an indication of a resource-deficient infrastructure. The use of the balloon driver enables the guest to give up physical memory pages that are not being used. In fact, ballooning can be a sign that you're getting extra value out of the memory you have in the host.

However, if ballooning causes the guest to give up memory that it actually needs, performance problems can occur due to guest operating system paging.

In vSphere Web Client, use the Memory Balloon counter to monitor a host's ballooning activity. This counter represents the total amount of memory claimed by the balloon drivers of the VMs on the host. The memory claimed by the balloon drivers can be used by other VMs. Again, this is not a performance problem, but it represents that the host takes memory from the less needful VMs for those with large amounts of Active Memory. If the host balloons, check the swap rate counters (Memory Swap In Rate and Memory Swap Out Rate), which might indicate performance problems, but it does not mean that you have a performance problem presently. It means that the unallocated pRAM on the host has dropped below a predefined threshold.

In a world where a vast majority of VMs have oversized vRAM, much of the vRAM -> pRAM mapping just holds zeroed out free pages, and these will be freed up by ballooning without displacing real data and risking poor performance in future.