Q. How much memory can I remove from a VM using hot-remove of memory in 2016 Hyper-V?
A. There is no set minimal level to which a VM can have its memory to be reduced to. Instead the amount of memory a VM can be reduced to is the amount of memory currently being used by the operating system (marked by applications/OS as in use) which is roughly the value shown in Task Manager as In use. Think of it like shrinking a disk; you can only shrink the disk down to the size of data written to the disk. You can only remove memory that is not being used by the OS. An example of this is shown where I tried to set a VM to 512 MB of memory that currently has 2048 MB assigned to it.
Notice that the response is a partially completed resize and the VM was reduced to 623MB of memory which is the maximum amount possible based on the memory currently being used by the VM.
This is a different behavior from dynamic memory which used the kernel mode device driver to request memory from the OS and that request had to be fulfilled even if the OS had to page to disk to meet the demand. With hot-remove it is not possible to remove more memory than is currently available. If you want to remove more memory you would have to shutdown services and processes inside the VM to free up additional memory (the same way to shrink a disk more you would have to delete data).