I have a question in regards to setting up a reseller. Please refer to the following example:

Reseller Account: 2GB of Disk Space 5GB of Bandwidth.

Once this account is set up through WHM with NO account limitations through the "reseller center". Will this allow the following:

The reseller will be allowed to create any size accounts, but once the actual usage is used up they will have to upgrade? I want the reseller to be able to create any size account and only be accountable for actual use.

Thanks!

Yep. That means they can oversell their WHM. You just have to keep tabs of their useage in the "Reseller Center" >> "View Reseller Usage/Stats" :)