w3wp.exe hogs memory

Welcome to the wonderful world of SBS. Recommended requirements for RAM = 10GB... and it REQUIRES a minimum of 8gb. (according to Microsoft.) for a good reason. It's not a fine-tuned well-oiled machine... it's very sloppy, bloated, and has everything under the sun bundled together. The more RAM you can throw at that box... the better. Unfortunately, you're limited to 32gb max. Which imho... is silly.

This is what I ended up doing:

setting the server application cache for the .NET AppPools to a low value (5 MB) by setting the privateBytesLimit parameter in the web.config at %WINDIR%\Microsoft.NET\Framework\<version>\Config as suggested in this answer:

    <configuration>
      <system.web>
         <caching>
           <cache privateBytesLimit="5242880" privateBytesPollTime="00:01:00" />
         </caching>
      </system.web>
    </configuration>

This helped reduce the memory usage to somewhat more than 1 GB with the default pool recycling settings.

Apparently, using the "server" type of garbage collector (<gcServer = "true">) can lead to significant memory consumption as well, but as it seems, <gcServer> is set to false by default.

If you suspect that the resulting memory consumption is a problem due to a software defect, you can use the Microsoft DebugDiag 1.2 to create a full memory dump and analyze the dump for common issues. If you think there may be a memory issue, you need to enable leak tracking by selecting the "Monitor for Leaks" option and let it run for a while before creating/analyzing the dump.

DebugDiag 1.2 Download
https://www.microsoft.com/download/en/details.aspx?id=26798