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How do they actually get that information (particularly memory utilization)? Do they rely on their agent that's pre-installed (but can be uninstalled)? At least in their web interface it doesn't show any of that utilization for my instances (one is Ubuntu with their agent uninstalled and the other one is NetBSD).
I don't know, wouldn't the Hypervisor be able to track resources usage by itself without anything else?
At least for memory usage the hypervisor wouldn't be able to tell the difference between memory merely used as cache vs. memory actually used by the software running on the machine (and OSes will usually just use any otherwise unused memory as cache, so you will likely see some inflated memory usage)
I don't think they care about the fine details. The just drag a slider and it tells them it would kick out this many free instances, and someone says "ok let's go with that".