I’d say a bit of both.
When the first exo-world was released not so long ago, it was full, people couldn’t get in. And if you managed to get in, it was unplayable. Otherwise, on normal worlds, it’s fine, no lag, because I’d say there’s usually an average of 5 to 10 players on each world, from what I’ve seen. Or at least on the worlds where there’s no big capital city like Eresho.
BUT they did change some changes server-wise with the Chrysominter update which apparently reduced the lag? Like, now, when you mine like crazy, the stone blocks that fall on the ground will clump together, reducing the number of blocks on the floor to render. That kind of things.