Are you playing with someone who has a slow computer? Valheim has this weird thing going on where the player who enters an area first hosts the monsters and everything else that's going on. This also happens with dedicated servers. So if you're playing with someone who has a slow PC, or a slow internet connection, the game might lag even though you initially started and hosted the game, because it might now be their PC that manages everything and not yours anymore. The initial host/server basically only saves and serves the world.

If that's not the case for you, have you checked how hot your CPU gets? Maybe your cooling is insufficient and it throttles down. vOv