I have been experiencing the same issue on an original XBox One since the 1.2.3 update. I originally isolated the issue to my farms animal pens but didn't know why. After reading this I did some testing. The lag is caused and created by chickens, pigs, cows and sheep (horses not tested). I first created a temporary spawn location away from my house/farm with a bed and chest to keep my test items. I start the game with my toon at the temp spawn point and remove any food items my animals would want from my toon. I then went to the pens, which are located above my house, 2 blocks separate my ceiling from the pen floors. (House is in a cliff face on the water) No appreciable lag occurred. I left the area and went back to my temp spawn point to get some seeds and put them in my hot bar. I went back to the pens and selected the seeds while outside the pens. Lag was instant and the more chickens I had the worse the lag, I tested this several times. Once I left the area the chickens would notice the seeds from the lag disappeared. I returned to the temp spawn location and removed the seeds from toon's inventory. I then headed back to the farm and lag would start anytime I got near the chickens even though I no longer had the seeds. I then went into my house and lag would start when I was under the same areas that it lagged above. The lag in this area only went away after a reboot of the world. I tested this the same exact way for each animal always starting with a freshly loaded world with the same results. I then tested it on each animal without reloading the world and had roughly the same result with the only noticeable difference being that the lag location now covered all the animals and the whole area was a loss as the game was unplayable. I did that test starting with chickens, then pigs and last the sheep & cows. When I got to the sheep & cows the game became so unresponsive I could not exit the game, I could not use the X button on the controller to return to the XBox One dashboard and was forced to hard reboot the XBox One. I would say this is a critical issue as a large player/customer base would have farms and rely on those farms. This issue cripples that element of game play and until resolved will make many players worlds unplayable.
I have been experiencing the same issue on an original XBox One since the 1.2.3 update. I originally isolated the issue to my farms animal pens but didn't know why. After reading this I did some testing. The lag is caused and created by chickens, pigs, cows and sheep (horses not tested). I first created a temporary spawn location away from my house/farm with a bed and chest to keep my test items. I start the game with my toon at the temp spawn point and remove any food items my animals would want from my toon. I then went to the pens, which are located above my house, 2 blocks separate my ceiling from the pen floors. (House is in a cliff face on the water) No appreciable lag occurred. I left the area and went back to my temp spawn point to get some seeds and put them in my hot bar. I went back to the pens and selected the seeds while outside the pens. Lag was instant and the more chickens I had the worse the lag, I tested this several times. Once I left the area the chickens would notice the seeds from the lag disappeared. I returned to the temp spawn location and removed the seeds from toon's inventory. I then headed back to the farm and lag would start anytime I got near the chickens even though I no longer had the seeds. I then went into my house and lag would start when I was under the same areas that it lagged above. The lag in this area only went away after a reboot of the world. I tested this the same exact way for each animal always starting with a freshly loaded world with the same results. I then tested it on each animal without reloading the world and had roughly the same result with the only noticeable difference being that the lag location now covered all the animals and the whole area was a loss as the game was unplayable. I did that test starting with chickens, then pigs and last the sheep & cows. When I got to the sheep & cows the game became so unresponsive I could not exit the game, I could not use the X button on the controller to return to the XBox One dashboard and was forced to hard reboot the XBox One. I would say this is a critical issue as a large player/customer base would have farms and rely on those farms. This issue cripples that element of game play and until resolved will make many players worlds unplayable.