NOTICE: Jerky animation (framerate) doesn't indicate lag, the usual cause of jerky animation is bad framerate. The framerate (FPS) in games can be usually increased by decreasing image quality or a lower screen resolution.
What is lag?
In a nutshell lag is usually caused by network problems further up the Internet chain. If one of the links or computers between the game's host and you is overloaded, then it will take longer for the data to get from the host computer to your computer. Sometimes packets of data go missing, and the receiving computer has to ask the sending computer to re-transmit the packet. Of course, all of this takes time which it what you percieve as 'lag'. There is never enough bandwidth available on the Internet as a whole for everyone using it to do all the things they want to do without causing some sort of delay.
Lag is also caused by the following things...
Screen resolution set too high.
Large graphic game elemets on the screen such as a boss.
Lots of graphical game elements on the screen at one time (i.e. smoke trails from rockets, explosions, characters, large maps, other players, etc.)
Using hot switching (i.e. ALT-TAB) to go between Windows and a running game.
Hosting a game and trying to play with others on the same computer.
Having a computer that just meets the minimal game requirements or insufficient system resources.
One or more programs running in the background. These programs typically include: Antivirus software, firewalls (usually those which are Windows based), instant messaging clients, spyware, email clients, scanner/printer monitoring software which may constantly poll the connected device, p2p programs such as iMesh, Edonkey, Kazaa, Morpheous...and so on.
Running an unpatched version of the game.
Poorly designed game, game map or mod.
High graphic/audio detail settings (try lowering/altering graphic and audio quality settings to improve Internet gameplay).
Overloaded or improperly configured game server; Insuffcient bandwidth on the server's end -- In other words, the server admin did not properly limit the player capacity or player data rates on the server.
Insufficient bandwidth on the player's end.
Using real-time voice communication (i.e. Roger Wilco, etc).
Other player's Internet connections (i.e. low bandwidth players: dial-up modems, satellite such as DirecPC)
Other players downloading game elements from the game server (i.e. maps, levels, character skins, texture maps, mods, etc).
...and hundreds if not thousands other things not listed here.
In short, no matter how fast your connection is there will be lag.
Tools
A tool is the Internet Traffic Report, a web site that monitors the flow of data around the world. It then displays a value between zero and 100. Higher values indicate faster and more reliable connections. You can therefore see if there are any bottlenecks or problem areas.
http://www.internettrafficreport.com
Glosasry
Screen resolution - is the number of dots (or pixels) available for use on a computer screen. The most common screen size is 1024x768; many people still use 640x480 and 800x600.
FPS (Frames Per Second) - a measure of how much information is used to store and display motion video. FPS also stands for First Person Shooter which is a game genre.
Bandwidth - is the maximum amount of data that can travel a communications path in a given time, usually measured in seconds. Think of the communications path as a pipe, the bandwidth represents the width of the pipe that determines how much data can flow through it all at once.
Latency (Lag) - is the time it takes for a computer to send a signal and be received at the other end. The internet as a network is such that it is hard to determine how your singals will get to their destination - if at all. When your computer is talking to a computer in the US for example, your singal will travel down many cable runs and through many routers even before it gets across the ocean. This invariably increases the time it takes for your singal to reach its destination, creating other problems. Like packetloss, which is caused by over-stressed routers and bad line conditions. There is a greater chance of a packet going missing the more routers your signal has to travel through. This is obviously very bad, and it could mean the difference between you winning and loosing. How do you know if your connection is good enough to play games on? You can use a ping. Ping will do just what it suggests, it will bounce a singal off the destination computer and record the time it takes to get back. This is your latency time in milliseconds. A latency time greater than around 400ms will cause serious problems with most games.
Packetloss/Packets - A packet is a unit of information that is sent over a network. When data is sent over the internet, the data is not sent in a continuous stream but is broken up into smaller manageable chunks. This is done to facilitate easier error checking and to reduce lost information. When a packet is sent, the receiver must acknowledge the sent packet before another is sent. In this way packets can be resent if they haven't reached their destination. The re-sending of packets when they are lost is a major cause of headaches when playing games over the internet. The reason most packets are lost is because your signal has to traverse too many routers, or hops as they are sometimes known, to get to their destination. If your signal has to travel through over 10 routers then gaming problems will definitely begin to be experienced.
Router - A router is a way for information to get to its destination. If a signal is sent down a cable and you wanted the next computer that sees it to push it in the right direction, you would use a router. Routers can come in all sizes, some routers will route a lot quicker and more efficiently than others. When the router can't cope with the load it will begin to discard information to keep up. This can often lead to your data needing to be resent, causing delays.
Side Note- This is also relevant to PS2. The framerate does cause lag in Socom but not is much since it is a console gaming platform but it does contribute. Ever notice that when a lot of people are in the same area it causes lag. More animations ups the framerate.