Isn't this an issue of the hypervisor? The guest OS is just told it has X amount of memory available, whether this memory exists or not (hence why you can overallocate memory for VMs), whether the hypervisor will allocate the entire amount or just what the guest OS is actually using should depend on the hypervisor itself.
How can the hypervisor know which memory the guest OS is actually using? It might have used some memory in the past and now no longer needs it, but from the POV of the hypervisor it might as well be used.
This is a communication problem between hypervisor and guest OS, because the hypervisor manages the physical memory but only the guest OS known how much memory should actually be used.
Apparently docker for Mac and Windows uses these, but in practice, docker containers tend to grow quite large in terms of memory, so not quite sure how well it works in practice, its certainly overallocates compared to running docker natively on a Linux host.