I remember having this problem when I used an NVIDIA 750 Ti with 2 GB of memory. Just opening a few Firefox or Ghostty terminals (both are GPU accelerated) would result in those apps crashing or not being able to render their contents. Sometimes the compositor would crash or become unstable too (kwin, niri, etc.). I had to reboot every few hours. Complete system instability.
This problem only happened with Wayland, when I switched to X windows these problems went away.
Since then I switched to an AMD RX 480 (8 GB) GPU and never had an issue here with Wayland, if GPU memory gets full, system memory gets seamlessly used instead. It felt like with the NVIDIA card, it never allocated back to system memory if no VRAM was available. This was only a problem on Linux since that same NVIDIA card was fine in Windows for 10+ years with zero issues related to instability around VRAM allocation.
Tons of people reported the same issue on Linux on NVIDIA's forums for years.
I wrote a lot more details and recorded demo videos around 9 months ago here https://nickjanetakis.com/blog/gpu-memory-allocation-bugs-wi..., but since then a lot of these things have been resolved from switching over to AMD.