Yeah, it's gotten worse over the years, even on servers that are modded ... I started using pre-generation for my server + a chunk border to mitigate the performance impact.
It's honestly baffling how inefficient the entire vanilla engine is. They've fixed up the lighting engine in 1.20 at the very least,so that annoyance is gone, but still... the fact that a few part time freelance devs can whoop mojang's ass (who pays like 100 developers for java) in every other optimization category is just baffling. What the fuck does mojang pay all those people to do on java? It took them a decade to fix the clusterfuck of an inefficient lighting engine.
Install the optimization mods, just do it. You can run them server-side only and it will not affect users on vanilla clients at all. But also a good idea to recommend they install the optimizations as well.
I remember that Folia recommended a really large CPU count...something like 32 or 64 threads. Is that still the case, or might I see real benefits even on like 4 threads?