The "Host Memory" is the memory which have been requested by a VM. Even if the host memory has only be requested for e.g. initializing it while booting, the memory pages assigned to the VM cannot be reclaimed by the host, because it doesn't know what exactly is in use by the guest OS. However, with all the memory optimization techniques in ESXi (transparent page sharing, memory compression, ballooning, ...) the memory is not "wasted" but used by the host if needed.
André