Since snapshot 14w25a I experience crippling lag when going underwater, both in Survival and Creative. As soon as I start going underwater the terminal keeps telling me that server-side chunk ticking is late by 200ms or more and it's almost impossible to do anything until I slowly get back above the sea and FPS go back to the usual 20ish.
It doesn't matter what graphical options I set, I went as low as Fast/No smooth shading/2 chunck render distance and nothing changed. Never happened before, I usually get around 20FPS at Fancy/full smooth shading/6 chunks and only a little lag when exploring new chunks, that's it.
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I did not notice any FPS drops, although it may be specific to your world. Perhaps you were near an underwater temple? The mobs there would have decreased performance.

It happens on fresh worlds and it doesn't matter if an underwater temple is near or not, I still experience lag. Also, lot of mobs never gave me problems; by chance today my little niece spammed around 50 villagers in 1.7.10-pre2 and there was no lag at all.

Please force a crash by pressing F3 + C for 10 seconds while in-game and attach the crash report ([minecraft/crash-reports/crash-<DATE>-client.txt|http://hopper.minecraft.net/help/finding-minecraft-data-folder]
) here.

I just found out it only happens when particles are not set to "minimal", regardless of other options. The following crash was forced while at Fast/No Smooth Lighting/2 chuncks Render Distance, No Bobbing and No Clouds.
Minecraft Crash Report ----
// Oh - I know what I did wrong!
Time: 20/06/14 13.54
Description: Manually triggered debug crash
java.lang.Throwable
at blj.q(SourceFile:1539)
at blj.ap(SourceFile:861)
at blj.a(SourceFile:303)
at net.minecraft.client.main.Main.main(SourceFile:121)
A detailed walkthrough of the error, its code path and all known details is as follows:
---------------------------------------------------------------------------------------
– Head –
Stacktrace:
at bya.a(SourceFile:310)
– Affected level –
Details:
Level name: MpServer
All players: 1 total; [cby['Wedhro'/412260, l='MpServer', x=162,61, y=59,61, z=287,38]]
Chunk stats: MultiplayerChunkCache: 30, 30
Level seed: 0
Level generator: ID 00 - default, ver 1. Features enabled: false
Level generator options:
Level spawn location: -60,00,64,00,136,00 - World: (-60,64,136), Chunk: (at 4,4,8 in -4,8; contains blocks -64,0,128 to -49,255,143), Region: (-1,0; contains chunks -32,0 to -1,31, blocks -512,0,0 to -1,255,511)
Level time: 17622 game time, 17622 day time
Level dimension: 0
Level storage version: 0x00000 - Unknown?
Level weather: Rain time: 0 (now: false), thunder time: 0 (now: false)
Level game mode: Game mode: creative (ID 1). Hardcore: false. Cheats: false
Forced entities: 9 total; [aca['Ragno'/1073904, l='MpServer', x=201,47, y=62,09, z=265,53], aan['Creeper'/1113894, l='MpServer', x=182,50, y=63,00, z=257,50], cby['Wedhro'/412260, l='MpServer', x=162,61, y=59,61, z=287,38], acf['Zombi'/1088955, l='MpServer', x=195,28, y=20,00, z=296,88], aap['Enderman'/1067083, l='MpServer', x=191,53, y=31,00, z=293,22], acf['Zombi'/1157555, l='MpServer', x=187,50, y=63,00, z=257,50], yn['Pipistrello'/1050645, l='MpServer', x=189,42, y=25,26, z=331,23], acf['Zombi'/1048379, l='MpServer', x=186,47, y=23,00, z=304,41], acf['Zombi'/1066033, l='MpServer', x=196,50, y=63,00, z=265,50]]
Retry entities: 0 total; []
Server brand: vanilla
Server type: Integrated singleplayer server
Stacktrace:
at bya.a(SourceFile:310)
at blj.b(SourceFile:2134)
at blj.a(SourceFile:312)
at net.minecraft.client.main.Main.main(SourceFile:121)
– System Details –
Details:
Minecraft Version: 14w25b
Operating System: Linux (i386) version 3.12.8-desktop586-2.mga4
Java Version: 1.7.0_45, Oracle Corporation
Java VM Version: OpenJDK Client VM (mixed mode), Oracle Corporation
Memory: 127423552 bytes (121 MB) / 453017600 bytes (432 MB) up to 518979584 bytes (494 MB)
JVM Flags: 1 total; -Xmx512M
IntCache: cache: 0, tcache: 0, allocated: 13, tallocated: 95
Launched Version: 14w25b
LWJGL: 2.9.1
OpenGL: Gallium 0.4 on AMD RS780 GL version 2.1 Mesa 10.0.2, X.Org
GL Caps: Using GL 1.3 multitexturing.
Using GL 1.3 texture combiners.
Using framebuffer objects because ARB_framebuffer_object is supported and separate blending is supported.
Shaders are available because OpenGL 2.1 is supported.
Is Modded: Probably not. Jar signature remains and client brand is untouched.
Type: Client (map_client.txt)
Resource Packs: []
Current Language: Italiano (Italia)
Profiler Position: N/A (disabled)

OpenGL: Gallium 0.4 on AMD RS780 GL version 2.1 Mesa 10.0.2, X.Org
Update to Catalyst 14.4: http://support.amd.com/en-us/download/desktop?os=Linux+x86#amd-catalyst-packages

I know the system needs updates and I'm actually switching to a different OS soon, the point here is that this didn't happen at all until 14w25a, and I'm playing MC since beta 1.2.

At the moment only features are implemented, optimizing will come after that.

I'm not complaining, I'm just here to help because how can they fix stuff if nobody tells them stuff is broken? Also, search feature needs some refinement, I searched for "lag" in 14w25 before posting this and nothing showed up.
PS: you may want to tell the other guy about the particles thing, the issue is definitely dependent on it.

I'm getting the same thing, but I can't confirm a relation to Particles settings.

Seems to be a widespread issue, but affects 32 bit Java much worse than 64 bit.
Have seen no relationship to particles - just water and large fps drops.
Discussed at length in this forum thread, with multiple people confirming 64 bit java helps (but doesn't fix), and fps graphs comparing 32 bit and 64 bit on a single machine showing poor 32 bit performance: http://www.minecraftforum.net/forums/minecraft-discussion/recent-updates-and-snapshots/2205517-i-think-i-found-the-source-of-the-lag?page=6#c109

Resolving to the two lag issues.