I’m a Linux/selfhosting novice, but from what I understand, Linux (and proxmox) uses intelligent resource management. It should adjust CPU and memory demands between tasks and VMs. My small stack of VMs running a media server and omv is basically always redlining with memory, occasionally with cpu (I don’t have a dedicated GPU for encoding though)
The storage is a different problem, but it doesn’t surprise me that Lemmy would use quite a bit of storage with active federation and multiple users.