As the summary says, area effect clouds from the ender dragon's fireballs seem to be causing massive tps drops. I haven't checked what's the cause of this but it is easily reproducable, just let the dragon fire at you at least one fireball and while the cloud begins to expand the TPS graph will go higher up.
I tested and this didn't happen in 1.16.5, also keep in mind the server side lag doesn't happen with every area effect cloud spawned.
Can confirm. Obviously dependant on hardware. But in my test a single cloud caused a tick to take as long as 50ms; as soon as it was gone, it went back to 0ms.
Note: The clouds the dragon breathes when it sits on the portal don't appear to affect performance at all. Only those it shoots while it's flying.