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Yes, it uses actual RAM if there's any left on the physical node.
If there's non left - your process will fail, that's why you should stay within your guaranteed memory to make sure you'll be safe.
I am running Debian on OpenVZ. Is there any kind of file that will tell me if any processes have failed?
Look fail counters in /proc/user_beancounters
Any ram on openvz (including the "guaranteed" ram) can be swap space
Just to clarify, the ram usage would still show up for use as actual ram. The server, if it got overloaded or ran out of memory, would start swapping.