Hey @Etyuhibosecyu!
A pawn is an actor with movement ability through the Floating Pawn Movement component and can be possessed by AI.
A character is a more specialized version of a pawn. They are required to use a capsule collider and a static mesh. With a lot of extra work, an actor could become a pawn, and a pawn could become a character. They are in the engine to save you lots and lots of time fine-tuning an actor.
Does it move? If no, it’s an actor.
Is it humanoid? Use character. The Character movement component is there to save you days of work, and it only works on a Character or a child of character.
Is it not humanoid? Use pawn and add the pawn floating movement component.
Your performance issues are likely not related to this. I’ve spawned 1000 characters to test out movement of a crowd, all animated, and lost one frame of FPS. It could be related to the textures you’re using or something like that. Of course, your mileage may vary.
If you need lots of an enemy, and they are basic, use Pawn, I’d say. But if they are humanoid, try limiting the amount spawned at one time. How many NPCs are you working with?
Let’s continue the conversation and see what works best for you!