This is relatively new feature of the Tibia 11 client. Previous client versions were not able to display high latency. Your character could freeze and your lag would still display as if everything was OK. This could be confusing to users.
In Tibia 11, when your latency is high and the requests take long to complete (essentially when you freeze), the latency display will start counting the time. It will stop the count as soon as it receives a response to the request that was sent from the client (when you unfreeze). This way you are getting a more reliable lag check.
This is also very briefly explained in the Technical FAQ on Tibia:http://forum.tibia.com/forum/?action=announcement&announcementid=79&boardid=13#2j
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