Earlier quoted context omitted.
> Each player loads in a lot of living entities (monsters/animals/...) and block entities (furnaces, redstone, ...) that all need to update. Sure, but that list of entities in the area is close to static (apart from crazy redstone magic). One would expect them to be pooled and not have many allocations for each tick.
But each has to do a lot of stuff. People on such big servers build farms with hundreds of mobs dropping thousands of items which then go through redstone sorting systems.
~Normally, yeah, but Folia is based on Paper which, AFAIK, is known for its unreliability when it comes to the technical aspects of Minecraft (ie redstone and farms.) Even your bog-standard simple item sorter is apparently a bit hit-or-miss on Paper.~
Edit: Possibly outdated info, things sound better re: technical Minecraft support on Paper now according to 'ocelotpotpie.