How many cores do kubernetes pods use when it's CPU usage is limited by policy?

It will limit to 20% of one core, i.e. 200m. Also, limit means a pod can touch a maximum of that much CPU and no more. So pod CPU utilization will not always touch the limit.

Total CPU limit of a cluster is the total amount of cores used by all nodes present in cluster.

If you have a 2 node cluster and the first node has 2 cores and second node has 1 core, K8s CPU capacity will be 3 cores (2 core + 1 core). If you have a pod which requests 1.5 cores, then it will not be scheduled to the second node, as that node has a capacity of only 1 core. It will instead be scheduled to first node, since it has 2 cores.