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I understand that in the free edition of ESXi we can only allocate 8 virtual cores to the guest VM.

In my lab I have a PC with 16 Cores. Will ESXi use all 16 cores (which I believe it should) OR will it only use 8 cores?

Any documentation link will be appreciated.

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It will use all 16 physical cores, but you will not be able to use VMs that have more than 8 virtual cores.

When you power up a VM with, for example 12 cores, you will get the error message:

Feature 'Virtual SMP' not licensed, requires 12 have 8

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The host I used to test this has four VMs running, totaling 13 vCPUs.

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