In games like, for example, Ghost Recon: Wildlands, there is an indicator to show how much of the GPU memory is being used when changing settings. However, why is it that even though the total usage is just around 3000MB, the game's performance drops significantly to less than 30fps? In my experience, I get good performance when the total consumption is only around 2000MB. Why can't the whole memory be utilized without dropping fps?
Consider using software like MSI Afterburner or other GPU-oriented software to monitor your GPU closely. Memory is not the only factor. For instance, Mutant Year Zero - Road to Eden is a top-down RPG that doesn't look that amazing, its textures weigh next to nothing, but my fans need to run at 70 percent and my RX480 is at 78-79 Celsius. If it goes anywhere higher, card starts to thermal throttle and FPS drops drastically.
On the other hand, R6: Siege can take up to 6.4 GB VRAM with ULTRA pack of textures (which you need to download separately and which almost doubles the size of the game), but it will run fine fps-wise on much lower temperatures for me.
That's because, in general, while memory is a limiting factor - if a game requires more VRAM than you have, you will have troubles even launching it - the memory does not influence performance that much. On the other hand core clock is what usually affects FPS and instead of "works/doesn't work" it will gradually lower your FPS, as you try to play more and more demanding titles.