In all base building games they usually limit the building to preserve performance, this game does not so it's up to you how low your FPS goes.
In all terraforming games the more you edit, the more the game has to keep track of. This game uses a small increment partial voxel model with smoothing (cubes that you can take partial pieces from) but unlike something like minecraft, the game isn't optimized for that yet, and even when it is, you're still going to take a huge hit if you edit too much terrain.

Anyway, there are several things you can do to recover fps or prevent the decay.
1. don't edit terrain...
2. use existing world structures to reduce the amount of player edits
3. edit the boot config file as above
4. use the Graphics Config Plus mod https://www.nexusmods.com/valheim/mods/351
and then edit the config file it creates like in my other post on this
https://steamcommunity.com/app/892970/discussions/2/3073117690269713806/?tscn=1617095940