VMware ESX Server is a thin kernel that runs on hardware and virtualizes resources to run virtual machines (VMs). It employs several memory management techniques like ballooning, memory sharing, and reclaiming idle memory. Ballooning coaxes guest operating systems into releasing memory without their involvement. Memory sharing reduces total memory usage by identifying identical pages across VMs. The system also uses proportional allocation and an idle memory tax to distribute memory to VMs based on their usage.