Actually, "fall down and go boom" is a relatively accurate description of what will happen. Trying to interpret your question, I'm seeing that you turned off virtual memory completely, and are relying purely on the physical memory. So what the others are saying about it swapping to HDD is wrong, as it won't happen with out virtual memory.
When you run out of RAM, data will need to get stored, which means having to push out old data. This means that applications that are running will start to lose data that they were expecting to be there. The result is that you have many applications around you all starting to crash out on you.
If you're low on RAM and the potential for runnign out is real, don't turn VM off. yes, you'll take a performance hit as things page back and forth to disk, but it'll be even worse if your system randomly starts to crash and burn.