Actually we ARE using VM Memory Usage (Active/Granted) metric in our reports.
VM is considered as under-sized when its average CPU/Memory usage is above 90%, besides you should have CPU Ready, Swap Out Rate metrics above the defined threshold too.
As to over-sized VMs, then we are looking at both average usage and peak resource utilization to give you VM sizing recommendations. Keep in mind that looking just on average usage cannot give you the true picture of VM resource utilization, as for example your accounting department might be using the VM heavily only once a week and you should keep allocated RAM, CPU on the same level to satisfy the resources demand during the busiest day of the week for this VM. In addition to this logic, we reserve 25% of available resources, so that your VM is not starving on CPU,Memory resources during peak hours.
If you want to dig deeper, I would suggest reviewing weekly resources utilization of this VM - check out average and peak CPU, Memory usage and other related performance metrics.
Hope this helps!