Yes, obviously the Windows update causing incorrect GPU switching is what causes the OP's issue in one specific area of the game world and not anywhere else. /s

The fact of the matter is that "excessive" terraforming and building in a relatively small region destroys framerates... and has for years. Again, this is a known issue. It's caused by the fact that the terrain is randomly generated, so instead of being able to update "the map", changes to terrain (and building pieces themselves) are saved individually; when a certain critical threshold is reached (which is somewhat hardware dependent, in that higher-end hardware can handle a few more instances before trying to have an HCF error), the game does more loading than rendering... which means the frame time increases, which means fewer frames per second.

Since you obviously didn't read the first thread I linked, here's another one from the same time frame, but on reddit. Maybe you'll believe the gamer nerds, since you won't believe the gamer geeks? This is not wild conjecture; this has been tested (repeatedly) and proven.
https://www.reddit.com/r/valheim/comments/m3sq72/instances_data_and_fpsefficient_base_building/