Valheim's dedicated servers should have lower latency now - Rock Paper Shotgun

Most players should have lower latency now when playing on dedicated servers.

Less brief: this is because the game now uses direct connections instead of Steam Datagram Relay (SDR).

SDR is billed as a way to carry game traffic through Valve's network, making it faster and more secure, though it seems that hasn't been the case for Valheim players.