All the guns are real. It 's just that the hosts' programming prevents them from hurting humans.
I'm still not totally sure how the guns work, so I'm just giving it the benefit of the doubt for the moment. The MiB scene with the bullets does highlight differences between cartridges that he has, presumably the ones with actual bullets being real and the one without being fake, but that doesn't really settle the issue.
The hosts can shoot a person and create solid impacts on them weak enough that the person can take the hit without even blinking. But, they do blast away clothing, and Teddy can't pull the trigger point blank on the MiB because, presumably, there'd be a chance it'd harm him.
How these bullets shred through the flesh and bone of hosts that presumably pass for human from skin to marrow (a reasonable assumption given newcomer "intimacy" satisfaction, the organ printing, along with the living insides we've seen from various injuries and Maeve's surgery) is a bit of a conundrum. Or rather, how they don't do the same thing to people.
It's hard to believe that there's no projectile being fired and the clothing, environments, and hosts are all just wired to explode at any calculated impact point. But, it's nearly as hard to believe that they'd let guests shoot actual projectiles of substantial force in the park, and that those projectiles were tuned so as to destroy hosts so realistically and still be harmless enough to people that their use doesn't register as a park concern. William and his friend didn't know if someone was a host when they were eating dinner. What if (Ben Barnes) had stood up and shot that guy in the ear? What if the drunk guest that randomly killed Teddy had decided to shoot someone else who happened to be real, point blank execution-style?
I'm chalking it up to "Captain America's shield does whatever we need it to do" methodology for now, which is fine for the moment. But, they did go straight up Chekhov's Bullets with the last MiB scene, so I have to assume that there'll be a real tie-in down the line. "Cap's Magic Shield" works fine when you don't focus on it. With how they highlighted the bullets, though, it'll be disappointing if there isn't a believable payoff/explanation down the line.
That's partly true, though the guns also use special smart ammunition that becomes a non-lethal, though still somewhat painful, round when fired at guests, which is why hosts are allowed to shoot a guest as much as they want (given an appropriate context for their character/script/guest actions). Their programming explicitly forbids them from taking headshots on guests though.
This is the one thing that I had thought of that might explain it, some sort of 'dissolving' bullet that calculates mid-flight, but that's still a bit much of a risk for someone getting shot in the eye.