Game Unplayable in Multiplayer Due to Lag & Crashes

This issue has been ongoing since the 1.21 Tricky Trials update dropped on Switch in June 2024. I like to play this game with my partner and his father. Two of us play on a full Switch and one plays with Switch Lite. We never had issues like this before the 1.21 update and played together no problem. Nowadays, the game runs alright with two players (one host + one additional) but as soon as a third player joins, the game lags extremely. We can't open chests or our inventory, chunks don't load, doors don't open, and if you move your player while the game is lagging you end up suffocating in a wall. It is unplayable. If we wait for the lag to pass, the game eventually kicks out the two additional players every time.

When the 1.21 update came in June, the lag issue was less severe, and the game would run with three players for a few minutes before the lag started. After the 1.21.41 update, the lag starts as soon as a third player attempts to join so it has been impossible to play together at all.

We have tried restarting the game, deleting and reinstalling the game, logging in/out, and all other network troubleshooting methods suggested by the support team. We have tried alternating who hosts and restarting with a fresh save file. Nothing helps and I believe the problem is with Minecraft Bedrock for Nintendo Switch itself.