Entity interpolation
Also said as Interpolation, Lerp, Snapshot interpolation
Show other players slightly in the past, by drawing a smooth line between two updates you already have. They move evenly, and they are always a little older than they look.
Updates come far less often than frames, so other players would otherwise jump from spot to spot. The buffer also rides out one lost update. The price is more delay on everyone you are trying to hit.
Say it
“Render other players 100 ms in the past, between server updates at 20 Hz. That gives us two updates to work with, and survives one lost packet with no visible hitch.”
Where you’ve seen it
Valve's Source engine defaults to 100 ms of interpolation, chosen so that even if one snapshot is lost there are still two valid ones to draw between.
Not to be confused with extrapolation
Interpolation draws between two things that happened, so it is always right and always late. Extrapolation guesses ahead, so it is up to date and sometimes wrong, and it looks bad when people turn.