What is CPU oversubscription?

CPU oversubscription refers to a condition where there are more virtual machines (VMs) allocated to the CPU resources than the physical CPU can handle effectively. In this scenario, multiple VMs compete for the limited CPU resources, which can lead to performance degradation. This over-allocation occurs because it is often perceived that not all VMs will utilize their allocated CPUs at maximum capacity at the same time.

Thus, while oversubscription can provide flexibility and resource efficiency, it can also result in contention for CPU cycles, causing increased latency and reduced performance for applications running on those VMs. This concept is foundational in virtualized environments, where administrators must balance resource allocation and utilization to optimize performance while avoiding bottlenecks.