It's based on the average size of the VM in the cluster.  If you look at the Capacity Management dashboard in the UI it can give you more details per cluster.  It's based on the average of the min/max/avg utilization across all the VMs in a given period of time (usually 90 days).  This cannot be changed today, but there is work being done to allow for you to specify a slot size for something like small/medium/large/etc...    That functionality does however exist in the Foglight for Virtualization, Standard Edition.  It might be worthwhile to look at that if you need it sooner.
We just started evaluating Foglight for capacity planning and assessment. One of the reports I believe our leadership will be interested in is the "VMware Cluster VMs Capacity" report. I see the report provides a value for VMs remaining. I'd like to know a little more about this value and how it is calculated:   We will have a small, medium, and large VM offering depending on resource allocation. I'd like to alter the report to display how many of each type of VM I would have available....or point to an existing VM and, based on it's resources and workload, determine how many of that server I have available. 
VMware Cluster VMs Capacity report