While evaluating a couple of VMware vSphere monitoring and reporting products this week (more specifically vCOPS and Veeam One), I noticed that there was an alert on a VM common to both monitoring tools. This alert indicated that there was significant memory ballooning on one of the VMs in the environment. Normally, ballooning will only occur when there is memory contention on the host, but upon inspecting the resources on the host, this was not the case.
From above, we can see that there was approximately 25% of memory still available. Next checking the performance statistics of the VM shows that 2.7 GB was reclaimed by the ballooning driver. Looking more carefully into the memory section in the "Resource Allocation" tab, I noticed that there was a memory limit set to 1 GB. Setting it back to the default unlimited reservation and then doing a vMotion reduced the ballooned memory to 0.