There are several distinct types of "lag" (Technically not all "lag" but different things that can degrade the player experience) that can be present. The names given here are not official, but just names I assigned, and from my experience are typically used to refer to the lag; they should not be treated as canon.

Input lag: Lag caused by the input device failing to deliver the data about player actions to the application. i.e. keyboard which for one reason or another takes too long to react.

Application Processing lag: When the machine does not have enough CPU power to calculate what is going on. Causes stuttering when physics and AI are needed.

Video processing lag: When the GPU is not powerful enough to handle the game/current settings. Causes low FPS and stuttering when attempting to render the content.

Net lag: Ping, jitter, throughput issues causing jerky movement for other players. Only applies to multiplayer, what most people refer to as lag.

Display processing lag: Time used by the display from when it receives pixel data to the time it takes to "send" the data to the pixel. Once it is "sent" to the pixel the "Display response time" effectively starts as the pixel changes to that color. This is causes by the above mentioned "scaler" for handling non-native resolutions - this part of the hardware also handles the OSD. Typically not much lag is introduced here, however due to the feature-set of IPS panels (typically very high resolutions, extra color gamuts, and the like) this can be a little more than a comparable TFT panel.

Display response time: The time provided in the technical specifications for a display for that display to change from a black pixel to a white pixel. Depending on calculations it may also be certain shades of grey to other shades of grey - either way it is the time quoted for a pixel to change color. High values cause ghosting. 8ms and above is considered to cause noticeable ghosting, depending on how sensitive/tuned an individual is they may notice slight amounts above 5/6ms. Can be negated in fast paced games with things such as motion blur, as it causes a very similar effect. IPS panels typically cannot get as low as a TFT panel.

Since there are so many areas troubleshooting some "lag" can be difficult - net lag and video processing lag are easy to identify, however both the input lag and display lag can be hard - input lag may be getting confused with application processing lag (The hardware in the peripheral may be delivering the signal in a timely manner but the application may not register it for several ms) similarly you may think there is input lag, but it is processing lag on the display - after the data is sent from the video card and before the display attempts to set the color of the pixel - high end displays may need to do a LOT of work here - especially the high end IPS panels designed for graphics work (To name a few tasks: Pick the color space/gamut, normalize the color internally, scale the image if it not running at native resolution) this is all happening on dedicated hardware for each task but each task you add naturally adds a little more time.