I've been battling unusually bad lag since patch 5.5 came out. I'm on Charter Spectrum (sigh) so occasional bouts of lag are a way of life, but this was extremely unusual in that I would freeze for 10-15 seconds, then get a rush of activities all at once in a burst once the freeze lifted.
Once it was most definitely my internet (I had a download speed of 0.0.7 on speedtest) but last night's egregiously bad lag prompted me to run a series of basic diagnostic tests.
1. Continuous ping to Primal DC - pings remained fairly stable, with some latency spikes but no lost packets
2. Local network program usage on my system
3. Local processes via Task Manager
What I discovered was that One Drive was hogging up bandwidth occasionally. Puzzled, I disabled it entirely, and found that the lag improved considerably shortly after that. I also nuked Chrome, but after some thought I'm about 90% sure that One Drive was the source of the lag.
Why?
The default installation of FFXIV on Windows stores certain files in Documents/My Games. This includes your game's local log data. This folder is synced by default to One Drive. Log files don't take up a lot of room (they're text files, measured in kilobytes) but that doesn't matter if your computer is having a read/write war with one of them. That.... is a problem when you are in the middle of a complex summoner rotation in a Nier raid. XIV and One Drive would fight for ownership of the file, and eventually One Drive would be satisfied with its file syncing, and relinquish control, giving my poor game the few moments it needed to catch up again.
TL;DR IF YOU ARE HAVING WEIRD LAG SINCE 5.5 DISABLE ONE DRIVE.
The more permanent solution is to exclude the XIV folder from One Drive sync entirely, since they're log files! They don't have to be saved forever! A much better solution for backups is to run a nightly backup job using Windows to an external drive, so you get a total daily sync of your whole system. Real time updates for home users is overkill.