Reservation reserve resource for specific VMs.
Reservation - Guaranteed memory allocation for this virtual machine.
Limit - Upper limit for this virtual machine’s memory allocation.
Unlimited - No upper limit is specified
if you set unlimited for VM RAM, it will utilizes all assigned memory. e.g if you have assigned 4 GB, it will use all that.
or if you limit your VM to use only 3 GB then thought it will have 4 GB assigned in it will not cross 3 GB Limits.
There is no harm in setting unlimited for VMs unless your VMs are really need lot of CPU and RAM and there is resource crunch.
Thanks,
Haridas