No, that was (well, the question: is?) a common issue with the game server (software) written poorly for high instance count.

But I can see there were some user made fixes for it:
https://jamesachambers.com/revisiting-fixing-valheim-lag-modifying-send-receive-limits/

according to this post (2022. Oct) the problem still exists, but I'd like some feedback if that is not the case (to decide if we should try to play it again).