It's more like this.
The reseller has 20 users, so with the usual limited they would be able to use 20 CPUs, but the reseller limit is applied to limit the resellers accounts in total to 4 CPUs (400% CPU). Once the resellers users have reached 400% in total the sites start to slow down.
If you actually give individual users too lower a CPU limit individually it uses more CPU due to the added context switching, which is why it's recommended to offer 100% CPU or more per user.
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