Reservations specify the minimum allocation guaranteed to a VM. When the VM is powered on, the ESXi hypervisor assigns resources based on the specified minimum reservation regardless of whether the physical server is heavily loaded. Resources are allocated only when requested by the VM, and if the host's unallocated resources don't meet the reservation requirements, the VM cannot be powered on. The default reservation is set to 0.

To make it simple, if you make a reservation, the VM will always have a reserved amount of resources available, even during contention. When there is contention, VMs without a reservation must free up resources to the VMs with a reservation. For the remaining resources, the VMs will compete between each other based on the shares that they have.

Reservation, on the other hand, does not mean that the VM will lock such resources, and they will not be available for anybody else. If the VM does not use resources that are reserved, other VMs can freely use them.