Taking 2.5 megabytes per second of compressed new state information, uncompressing it, and applying it (across the "thousands and thousands of networked entities", etc, that keep being talked about) to the game state? All the memory thrash that implies, along with the knock-on effects (animation updates, yadda yadda)?

Yeah, that has a performance cost.

Will this impact a big-money gaming rig? Probably not? Will it run good on the Steam Deck? Probably not.

Generally, in a game loop, all this stuff is going to be single-threaded and blocking, right? It's mutating the game state, that's the classic why-games-suck-at-thriving-on-many-small-cores problem. So your performance capacity ends up being tighter than you might think relative to other "ingest data" tasks.

Let's say your game's networking runs at 30 ticks a second, and you've done a great job in uncoupling rendering from the game loop, so you're lucky enough to not have to worry about that. You still only have 30ms, on a single thread, to handle networking (likely no special kernel-skipping stuff on clients!), unpack, apply and propagate your changes, and also do your local game loop stuff. If you miss that interval once, the game starts to fall behind and feel bad to play.

Now, you could say "lower the tick rate", but then you'd need less data, too, and your game gets less responsive (fine for some games, not for others)