TFC is very poorly (or really not at all) optimized for servers. Especially not large populated servers such as ours. The issue isn't the system the TFC server is running on, the issue is the mod itself.
I've spent a lot of effort and time to try to reduce the amount of lag as much as I can, and it appears to have helped, but can't eliminate the lag, it's only made it less severe during peak times, which is all we can hope to do.
As many of you know, I've been killing off the mass hoards of horses that have plagued the world due to a severe bug that took a large amount of time to be found, addressed, and fixed. I try to leave a few horses every time I do this, renaming them to "Horse (Protected)" so that when I do a kill-all, it only targets entities named "Horse" and leaves the 'protected' ones alone. I've also been adjusting the configuration files to try to help reduce overall lag. When the server has around 30 people, it's running almost 10ms less time per tick than it was a few days ago, which is a really good amount, however when it scales up to 40+ players online, it's still going to lag.

What actually causes the lag?
Entities, chunks with lots of stuff, charcoal pits, chunks with no apparent cause for using ¾ms to 1ms of processing time, chunks being loaded rapidly due to players teleporting or quickly travelling during peak population (because TFC plays 'catch up' on food and animals when the chunk is loaded after having been unloaded in order to apply animal birth and food decay, and possibly other things, too), and various other factors.
I monitor the server logs and events. You guys teleport quite often. During peak times, there's about a teleport done every 4-6 seconds. To put this into perspective, you guys teleport over twice as often as you type a line of text to one another. It's not a big amount of lag, and it's not very noticeable, but it all adds up, every little thing adds up. I'm only explaining this so that you understand the sources of the lag.


Many have requested and suggested to lower the player limit.
Think about this for a moment.
If we lower the player count to eliminate lag, you may not be able to play on the server very often, not without spending a large amount of time typing to slip into an open slot when one opens. Would you rather deal with the lag, or not get to play when you want to play, and then also have friends not able to log in either?
This suggestion does not fix the problem. It applies a band-aid, and then creates a new (much bigger) problem.
Less players means less loaded chunks, less entities, less lag. However, we can't make there be less players without it affecting everyone negatively. This is an OPEN server, it will not be set to white-list, and we will not make a white-listed one.

Please understand the following:
This has not eliminated lag. Lag will still exist. The lag can not be completely removed without impairing YOUR ability to play more than the lag does.

I do everything I can for all of you, and I just hope you can understand that there's a limit to what can be done to help this problem.