Lockstep?

In the options my game is set to use "Lockstep". Doubt I've ever changed this as I'm not sure what either option does. However, is it best to use Lockstep or something else?

I'm getting lots of jittery performance due to lag. The "baseline" is around 50ms, but it will frequently spike into the hundreds, and go haywire for a while. Even when just sitting in my hideout.

So, for years Path of Exile only had Predictive networking - and this led to desync, as some of the assumptions made by the game client proved to be incorrect. While GGG continues to work on improving Predictive, they also implemented Lockstep networking.

With Predictive, if you tell the game client you're moving your character, it will show your character moving at the same time that it sends the command to the server. With Lockstep, the game client will not begin showing your character moving until the server authorizes the action.

If you have a stable, low latency connection to the server then Lockstep is hands-down the best option. If your ping is stable but high - or you get spikes, like you've mentioned - then Predictive can offer a smoother experience. I can't play Path of Exile using your connection, so really all I can do is suggest you try both options and see which you prefer.