Hot-adding memory is essentially have the equivalent of the mmap kernel syscall, but there's no ability for the VMs to return memory that they no longer need, as you have with the munmap syscall. So you may start out without overprovisioning, but eventually you will hit peak hours, redistribute your VMs, and be overprovisioned again unless you reboot machines after peak hours.

Even if you did add a capability to compact and dynamically stop using hardware memory into linux, then signal the hardware layer that it's not used, you're again just implementing another feature provided by standard kernels for decades. Not to mention this feature seems basically coupled to virtualized hardware.