What is "memory swapping" in Fusion? In VMware's RAM setting, if allocated memory goes higher than the recommended maximum, it warns "if higher, memory swapping may occur".  

What is "memory swapping" in this context? And what will I see?
It means the virtual memory for the virtual machine may be swapped to disk, massively slowing down both the guest and the host computers.  

If you need to know about "swapping" in general, well, I was going to point you to the Wikipedia page on it, but that redirects to a page on "paging" which is caught up in some geek war about the difference between swapping, paging, segments, and even overlays, so it may be more work than it is worth to understand it from there.  The article on Virtual Memory is easier to read, but in a different kind of Wiki-unhappiness.  

The short story is that if you only have 4GB of memory but want to run 4 programs, each of which wants to use 2GB of memory, the OS can let you do that by suspending the programs you are not using and saving the state of their memory to disk in a section of the disk called the "swap space".  When computers such as laptops do that with the whole OS, we now call it "hibernating".  When it was first done to entire individual applications while the system is running, lots of people called it "swapping" because you were swapping one active process for another. Now it's done differently, with small blocks of memory called "pages" rather than whole applications, and lots of other optimizations (and consequent complications), but it's the same general idea. 

If anyone has better reference material to point to, please add them to this answer, but please read them first and make sure they are appropriate for those not-so-few ordinary Mac users who do not much care about the details of how computers work.