Raise the data per second limit
There have been reports that modifying the assembly_valheim.dll file to increase m_dataPerSec has resolved some of the issues caused by the server limiting the outbound bytes/seconds to each client.
Please see this Reddit thread for further information:
https://www.reddit.com/r/valheim/comments/lkea78/valheim_dedicated_server_lag/
It appears that this will not solve the issue for people with DSL but it is worth investigation.