This game is laggy thats the way it was made, not the server or our hosting. Try this solution.
You can turn off movement predictions. See if that helps. Run the following in your console on a server:
ThePlayer:EnableMovementPrediction(false)
Pros: Your distance from mobs is the true distance (they wont be able to hit you when you thought you were out of range). Also, lag spikes wont cause you to run in a random circle.
Cons: Your inputs are slightly more delayed now. Also, lag spikes means you'll probably just be stuck in one position.
Worth a shot