When a CPU Limit is set on a virtual machine resource setting, the virtual machine is deliberately held from being scheduled to a PCPU when it has used up its allocated CPU resource. This happens regardless of the CPU utilization. The specified limit is applied to entire virtual machine CPU resources, not to guest OS. If the limit is set to 500MHz, the virtual machine is rescheduled from the PCPU and has to wait before it is allowed to be scheduled again. As such, the virtual machine might experience performance degradation. If many virtual machines have the limit on the same ESXi host, they might impact on entire ESXi activities.