I did a little more digging and it seems that shutdown -r gracefully shuts down the guests as shutdown -h did. So it appears as though reboot is more harsh than shutdown.
The thing that still confuses me is this snippet from the reboot man page:
If halt or reboot is called when the system is not in runlevel 0 or 6,
in other words when it’s running normally, shutdown will be invoked
instead (with the -h or -r flag). For more info see the shutdown(8)
If I'm issuing a reboot from runlevel 3, by the manual's own definition, it should call shutdown -r anyway which gracefully shuts down the guests. It apparently doesn't though. Any ideas as to why?