Why ever does Parallels 8 recommend max 4 GB RAM for a VM?

Solution 1:

It might be that the majority of the OSes that people virtualise (or at least those doing so with Parallels) can only use 4 GB of RAM anyway because they are 32-bit OSes, so it would not be necessary to have more than that. You shouldn't need more than 4 GB of RAM in the virtual machine anyway, so you partly answered your question. The majority of laptops these days don't have a massive 16 GB of RAM like you do; Parallels is only looking at the market side of things there.

If you really need more, why don't you just Boot Camp (you can Boot Camp with Linux as well); that way, you will use all of your computer's power if you need it. With your SSD, it won't take too long to restart.

Solution 2:

Figured I would update this post long after. With Parallels 9, there is no longer the non-sensical recommendation capped at 4GB: