In this post about how epic handled networking in Paragon, the author mentions:
SimulatedProxy Role, AKA Observer
Any other clients receive a steady stream of locations/state from Authority and apply them directly. There’s complexity added in with “network smoothing” where we clean up/make the positions/rotations being sent by the server look nicer by smoothing the character’s location, but mostly it’s just that - applying whatever state changes the server sends.
“A steady stream of locations/state” makes me believe that something was implemented by Epic to periodically correct the location/state of simulated proxies, but I may be misinterpreting.