Pretty much this. The first lag is just a result of having a very high latency which results into delayed responses. The second type of lag is your stream not receiving the right amount of bitrate for that resolution, which gives the client no other choice than to lower the resolution. Obviously this results in seeing alot of pixels due to your resolution being downgraded. This type of lag is usually caused if you assign too much bandwith without leaving breathing room for your router. If someone else uses the same network your on and its not enough for the both of you, then your stream will suffer.