Hi friends! This issue has been driving me BONKERS but I think I may have solved it. I am by no means a techy person at all, so I'm not really sure why or how this worked but I thought I would share it.
I am using a 2018 MacBook Pro with Monterey 12.0.1 installed, and as soon as I started using this new operating system I was constantly getting the alert "your system has run out of application memory" but none of the apps listed in the alert window were using more than a few hundred MB and I barely had anything open so I was super confused as to why this was happening. I have 330 GB available of 1 T memory as well.
I did some digging and googling and realized I needed to be looking at my activity monitor to see all of the processes currently running on my computer. Upon opening Activity Monitor, I saw that "WindowServer" was using 33.78 GB (for reference the next largest process was Chrome at 300 MB), so I double clicked it and even though I had no idea how important this process was and if doing this would erase my whole computer or something crazy, I was so frustrated with this issue that I selected "quit."
The computer went black for a few seconds and then came back with everything else still open and running just fine. "WindowServer" was now only showing around 100 MB. I have waited a few days to see if the problem was indeed solved, and so far I haven't had any issues! "WindowServer" is still below 500 MB (it fluctuates) and I have not had the "your system has run out of application memory" once since then whereas it was literally popping up every 10 minutes before. I still don't know what "WindowServer" is and to be honest I don't care, I am just relieved to finally be able to use my **** computer properly. I hope this helps some of you dealing with this issue too!