You receive an event message when the number of virtual machines registered on the host exceeds their limit.
This occurs when clients register more virtual machines on an ESXi host than the host can support.
If the limit is exceeded, the management agent is at risk of running out of system resources. Consequently, VMware vCenter Server might stop managing the corresponding ESXi host.
The value is 0 by default and requires a reboot to activate. Having the value set at 0 makes the host determine the value dynamically by amount of memory on host machine. Entering a different number overrides the value.