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The 300 concurrent connections that I refer to is not database connections this is the number of simultaneous connections to your website. This number is based on Web Wiz Forums that we host for customers that have this number of active users in their forums.

Each time someone looks at a page on your website quite a few connections will be made to the server to download the webpage, images on that web page, and any external JS or CSS files.

Most of our own servers host between 300 and 500 websites and typically have around 200 and 400 concurrent connections across all these websites hosted on the shared server. So you can see one web site using 300 concurrent connections would be using the same number of resources as 300 to 500 websites.

This means for a shared web host 1 website using 300 concurrent connections your website is using the same number of resources as 300 to 500 typically websites that are hosted on a shared server and so would be loosing money on your website and so will either ask for more money to host your website or throttle the amount of resources allocated to your website so they do not loose money on hosting your site.

Nice part about VM servers is that if one server isn't using much for resources, the host can move resources to where they are needed. You can really run a minimum of memory and processors for each VM that way.
We've got 20 servers at work, but we don't have 20 physical processors - when one server is sitting idle, another is using the resources the first might have had earlier.
It's great way to use resources more efficiently.
Our IIS servers, SharePoint and SQL are VMWare based, and we're attempting to put together a clustered SQL server under VMWare- it would be almost bullet-proof.