This usability issue is not present on VMware Fusion.
When I drag a running virtual machine window to the top of the Windows 10 (Host OS) screen, The workstation screen resizes itself, but the virtual machine doesn't reset its resolution.
Somewhere there is a missing notification in Workstation that is not telling the virtual machine that it should change screen resolution (using vmware tools), but only when it snaps to a new size.
This ONLY happens when the screen "snaps" to a size by dragging it to an edge of the Host OS windows system. If you slowly drag each corner of the workstation application to the size you want, vmware tools gets notified and readjusts the size of the desktop (Unless you disable that feature). This is also a problem with VMRC.
There are really only two conditions when this should not work:
1) You have a low default video ram size in the VMX file (Virtual machine settings). This can be adjusted to 8Mb and you will have no problems
2) At some point you were running the virtual machine and it asked if you wanted to keep the virtual machine screen resolution from adjusting. This is especially possible if you are using Windows 10 and it tells you it's set your virtual machine to a custom scaling factor and it asks if you would like it to continue to do that.
I actually do not like the custom scaling factor, however at the same time vmware tools is resetting the screen resolution which is what I want. So I leave that ON.
None of these issues is present when I snap workstation to occupy all of my monitor and it's really annoying and actually not easily possible to right click on the virtual machine desktop and get it to size exactly to the size of my new window because VMware tools makes this match EXACTLY. Take the same exact VM and run it in fusion (mac product) and all this works perfectly.
Anyone who has a solid workaround to make this automatically happen when the workstation window snaps to full screen ... you're a god.
