(Prediction is self explanatory, interpolation is a specific brand of smoothing by moving towards the true value - in this case position - instead of instantly setting it) I only hobby in game dev, I'm no expert on Lost Ark's system so take that how you will, but most likely what's happening is because their character is moving faster than your client is expecting it's just causing interpolation/prediction issues.
For TL DR feel free to skip the paragraphs I marked as quotes, I got into some technobabble.
