Summary:
Villagers working cause the game to slow down significantly. The more working villagers there are, the slower the game gets.
Steps to Reproduce:
Create a new world.
Place down 20 beds and workstation blocks.
Spawn 20 villagers.
Wait for the villagers to go to work.
Everything should now be slowed down. Try to hit one of the villagers, restore hunger, throw an item, or set yourself on fire.
Original Description:
The village I'm at plays in slow motion. Only I can move normally. Damage semms to also be slowed down since the iron golems take longer to die. Every entity that enters those chunks slow down as well. Every entity leaving moves normally.
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The problem probably caused by server time that sometimes got slowed down in village area

Seems like those chunks have something causing lag underground (very unlikely) but you should check

The lag only seem to occur while the villagers are in their working hours.

Even holding 12 can affect ServerTime. I don't understand how villagers standing next to their workplaces can cause such performance problems.

Have also noticed this on Bedrock Dedicated Server.
A villager trading hall one of the players made consumes 10-15% of the core the main game thread is running on. As soon as the area is left or the player logs out the usage drops.

I have approximately 12 villagers in a town on my Minecraft Bedrock Realm. The game plays fine at night when the villagers go into their homes to sleep. When day comes I receive an enormous lag spike followed by choppy villager, animals, and building for the remainder of the day. I have two other friends that play on my server and they experience horrible lag too during the day with the villagers. This has been occurring since the update. The game is almost unplayable. My character can move fine and I have no problems traveling, just the animals and villagers are choppy. The building is also laggy and does not register.
I downloaded the world and played it in single-player and there was no lag. I played through several night and day time cycles. The lag only occurs on Realms during the day when the villagers come out to piddle. I have no commands running, no ticks, or constant red-stone devices. I am thinking this is a Realms problem that has been occurring since the update.

This could be due to the new work requirement for iron golems spawning. The game has to track what % of villagers work each day. Perhaps instead of updating each villager record once per day, it is constantly updating the village record, perhaps on every game tick.

I have a village with several villagers spread out through multiple chunks. This causes no lag. However, I tried to build a wheat farm with 15 villagers concentrated in one central chunk, and I can't go anywhere near it or the game freezes for literally 30 seconds (everything stops moving, including villagers, minecarts, golems, and any other entities) before becoming very choppy when it starts moving again.

Happening on PS4 1.17.10 single player survival world.
Anytime I'm near villagers the game becomes very stuttery/choppy things begin to freeze everything slows down.

still in 1.18.30

Affects 1.19.20