It is lying if you cannot provide it.

Your all you can eat buffet analogy is wrong because it is equal to "unlimited hosting".
No restaurant can determine how much I can eat and there is not such thing as unimited.

Both are lies.

Telling a client that they have burst abilities to 1gb of ram or whatever the amount, when in fact they know the server is loaded to the point where said ram is not available, is a lie. No ifs, ands or buts. It's a lie.