Using WebRTC it won't lag. At least not for popular streams. For obscure content that no one watches. It might. But that isn't some deal breaker. It supports high resolution just fine. But honestly we don't need a ton of different resolutions for every video. It's a luxury and a convenience. Realistically with modern codex today the difference in bandwidth while not insignificant. Again is not a deal breaker. The distribution isn't all through a single entity. It is highly distributed.

Personally I had not messed with any peer tube instances for a year and a half or so. So the other night I installed it on an Android device and the experience has come leaps and bounds. If the content were there. And loading up as all the content that I did watch did. I could absolutely see myself using it. The issue will be content. And perhaps monetizing it. Though there is a lot of content that for one reason or another can't be monetized. Which would be perfectly happy on a service like this.