As was pointed out on a youtube video we need to get our hands on it to really see how the M1 manages memory because it is different from a "standard" ARM chip and the x86. All our knowledge of how RAM is utilized come from the x86 has handled it on Mac since the PowerPC change over. That said I do wonder how Apple is going to handle the Mac Pro when they finally get to it - that machine is all about expansion. THough we should see some idea with the higher end iMac Pros.
So... this is just from my brief time with M1, since I've only had the computer for less than a day up to this point. TL;DR: I can "see" that even 16GB may not be enough, but the "feel" is that 16GB is plenty even for use cases that greatly exceed the available memory.
My observation is this: 8GB and 16GB seem very limited, but even when swap is engaged, the performance degradation that we'd see on past Intel Macs are much less severe on M1. In fact, I'd say it's almost imperceptible.
On my system with 16GB RAM, I tried some insane use cases: opened some photos at 1Gpixels (yes, you read that right) in Photoshop, created 20 full bitmap layers, then applied various filters and effects to those. Let's just say Photoshop was really chugging along because it's still running under Rosetta 2. After that, it took up 12GB of RAM just by itself. Then I went to other apps... created 10 tabs in Safari, and opened up Capture One Pro, which took up about 3GB by itself.
Needless to say, opening just one extra tab in Safari caused swap to engage. But, even though Activity Monitor told me swap was happening, I couldn't tell if Safari was dropping frames while scrolling, or if it was missing a beat or not. Photoshop still chugged along because of Rosetta 2, but native apps worked without skipping a beat at that point. And amazingly, full-screen animations were still perfectly smooth.
So what I can say is this: yes, memory utilization doesn't seem to change. If you have apps that need RAM, they will use up that much RAM all the same. The difference is when we hit swap. On Intel Mac (I have a 16" MacBook, by the way), the behavior is... not graceful. CPU usage spikes up because things need to be swapped to storage then released from memory. M1 does swapping in a much more graceful way. I couldn't see any CPU usage spike at all. That probably is the most major difference.
As an aside, I was also one of those who was skeptical of the performance of the M1 chip (you can just scroll back in this thread some pages ago). When I finally got my M1, let's say... I was pleasantly surprised. There are still app compatibility issues, but... other than those, M1 has thoroughly blown me away as far as performance is concerned. I won't say "it's a game changer", but now it doesn't feel like my Mac is behind my iPhone and iPad anymore.