Latency

Latency is the transfer speed measurement of data between server and client.

Lag
When a player is suffering from lag it means their computer or internet connection is causing a delay in their awareness of what is going on in the game. This is normally caused when the data packets you send take longer than normal to reach the server and/or vice versa.

Lag can adversely affect game play in many ways, for example when a party is attacking a mob, a lagging player will see monsters in places they no longer occupy, reduce the time a person has to interrupt a skill, will hit monsters that have already died and react to conditions that no longer persist. E.g. Try to heal someone who is dead or remove a hex that is no longer there. In the eyes of the party, the player will be standing around, then running at a corpse, then casting a meaningless spell. In a very bad case of lag a player may not be able to move at all for a short amount of time.

Lag may also cause "rubber banding" whereby you move to a location then immediately appear back where you came from, this may occur multiple times before a player can walk properly again. However this may be more symptomatic of dropped packets, where data packets do not reach the destination at all.

Ping
Ping is a tool used to measure the transfer speed of client and server packets to each other. A packet is sent to the server and back. The time that this takes is measured in milliseconds. A lower ping is better; a ping of less than 200 will appear lag-free.

Users can monitor their ping by placing their cursor over the small round icon on the players screen just above the bottom right corner.

Indicator color is based on Last Ping.

Solutions

 * Move closer to the server computer, by reducing the distance between you and the server, it will reduce the time it takes packets to arrive at the server.
 * Check your connection for interference, if you have other hardware connected to the internet line they may be causing interference with the data.
 * Stop download/uploading other data on the internet connection.
 * If you have a wireless network, move closer to the router.

External sources

 * Lag-Wikipedia