U can use ur memory until its full, then the machine cannot allocate more ram and removes old stuff from ram. If you need more, you can still enable swap.

If you exhaust 100% of the systems RAM + SWAP faster than it can be released, services will cease to function; this isn't specific to just VPS's, but dedicated servers as well. You can run a CRON to drop the cached memory, though honestly, better managing your memory is the best solution.

If you're constantly seeing reboots, that's most likely because services are failing and their systems are rebooting instead of allowing the service to remain down, which is a good thing. Though it also signals that you probably need more RAM than what you currently have available.