Originally posted by KakkeBukkake:

Plenty of games do this. Its my understanding that higher settings usually have tech that is offloaded to the GPU, while on lower settings the same is done on the CPU. If you have a decent GPU, offloading some of the work for it lets the CPU to do its thing faster.

According to the first result on google, the reason valheim has bad framerate is because something about the servers having to work twice as hard to do something so this explanation actually makes a lot of sense