And that is indeed a million dollar question! Lag is pervasive in SL, and there is no such thing as a “lag free SIM” - except one that is completely empty.
Before this can be answered, it is first vital to understand what lag is exactly, so please refer to this page for an explanation of the 3 forms of lag.
If you find yourself being badly lagged, there are things you can do to reduce the effects of two of the three types: client and network. You can only reduce server side lag if you own or rent the parcel or region being affected by it.
This is the most common of lag you will experience in SL. And you can do a great deal about it, without requiring that others do anything, and most of it simply entails reducing your graphics settings. Try these one at a time; sometimes just one or two will be enough to make things significantly better. Also, they are not given in order: in different situations, some will be preferable solutions than others.
Graphics settings changes that may help:
These things will reduce the “quality” of your SL experience, but they may be required if you find that your movement is badly impaired by client side lag.
System issues to check:
Windows 10: Check to see if your computer is downloading updates in the background or running defragging operations.
If you own or rent a home, or a public venue, there are things you can do to reduce client lag for yourself and others without overly sacrificing the “feel” of the location. For example:
Another common cause of lag is your network connection. You may even have a high speed connection, but if you have set your bandwidth too low or too high in Firestorm, you will be causing lag for yourself.
Determining the optimal value for bandwidth in Firestorm is explained on on this page.
Other things that are known to affect connection speeds are firewalls and anti-virus software. So if you still experience network-related lag, you can try disabling these, temporarily, and seeing if things improve. If they do, then you may want to consider replacing firewall and/or anti-virus software.
In SL, you can reduce bandwidth usage (and thus network lag), by looking for and identifying items which cause frequent updates between client (the viewer) and SL servers. Many objects cause such updates; some you will need or want to keep, but you may be able to eliminate others.
To get a visual indication of what objects cause updates, go to top menu, Develop → Show info → Show Updates to Objects. (Press Ctrl-Alt-Q to enable Develop on the top menu, if it isn't.) This will enable colored trails above objects that are updating. Each color has a different meaning1):
You can disable showing of updates by unchecking the setting mentioned above: Develop → Show info → Show Updates.
Objects that update are generally (but not always) scripted. However, many scripted objects do not constantly generate updates. For example, a scripted chair that is not in use, is “idle”. It does nothing, and therefore isn't generating netwrok traffic.
NOTE: Some effects are in-world only; they cause things to change visually but are handled entirely by the client, thus do not create any network (or region) lag. These include: particles, texture animation, client-side rotation.
If you own or rent a parcel or region, then there are many things you can do to help reduce server lag. Here is a partial, incomplete list: