VMware (and other virtualisation technologies) share resources (memory, processor time, I/O of various kinds) between VMs according to various algorithms.
It is posssible to overcommit resources, because not all VMs will be using all the processing, memory or I/O that they need all the time. VMware's resource management guide is probably the best place to read up on what is possible in ESXi.
You can also manage the effect of the algorithms by weighting different VMs for different resources - e.g. you might give an application server VM a higher weighting for processor than a file server VM. However, the out of the box settings will handle most requirements very well. In some cases, doing some configuration here is enough to placate managers who don't quite get it, but of course be careful and read the docs for your version of VMware and understand what you are doing. If your manager doesn't need further placation, then just use the defaults.
Note that overcommitment isn't necessarily always a good idea, particularly if you have virtualised on a single server. You should monitor your use of resources in your ESXi estate, and if necessary add additional hosts/resources if you are frequently consuming all of any one or more resources.