Simulation distance
The server.properties setting that controls how many chunks around each player are actively ticked: mobs, crops, redstone and other game logic.
simulation-distance is a setting in server.properties, added in Minecraft 1.18. It sets the radius, in chunks, around each player in which the world is actively simulated. The default is 10.
What “simulated” means
Inside the simulation distance, chunks are ticked: mobs move and spawn, crops and trees grow through random ticks, redstone and hoppers run, furnaces smelt. Outside it, but still within the view distance, chunks are loaded and visible to the player but frozen. You can see a farm in the distance, but it does not work until you get closer.
Why it matters for server owners
Ticking is the main work the server does per tick, and the ticked area grows with the square of the radius. Lowering simulation distance reduces the load on the main thread directly, which is why it is one of the most effective settings for improving TPS. Unlike lowering view distance, players barely notice it visually.
The trade-off is gameplay: farms and machines need players closer to run, mob spawning happens in a smaller area around players, and some technical builds that depend on a large active area stop working as designed.
A common setup
Many servers keep a normal view distance and a lower simulation distance, for example a view distance around the default and a simulation distance several chunks lower. The exact values depend on your players, their builds and your hardware, so test rather than copy numbers.
Practical tip
Tell your players when you change simulation distance. If a mob farm suddenly stops, they will otherwise report it as a bug. A short note about how close they need to stand saves a lot of support questions.