Smooth Sync: Sync your Transforms Smoothly across the network

So I started with this default rolling ball template. Set “Number of players” = 2, checked “Run dedicated server”, as well dropped additional “Player start” component in the map. So I realized nothing is replicated trough the network. So what I did was adding:

UFUNCTION(Server, Reliable, WithValidation)
void ServerAddTorque(FVector Torque);

to run physics on server side, so its then replicated on all clients. And it worked, but when I really play around with the balls I can see them Laging (getting stuck and jumping to next pos). So my question is:

  1. What is this LAG? I mean, it’s all on same machine!
  2. Can “Smooth Sync” help to correct this and how?
  3. And how it really works? The doc says just drop the component to the actor. But how then does it know what to sync and what not?