LFS doesn't use any kind of complex send -> acknowledge -> confirm system, meaning the client doesn't have to wait for the server's response to execute the issued actions. All clients continuously send position updates, at a fixed interval but also when input changes, whichever applies at any given step. The receiving end (the server) will always re-distribute the most recent update it has available, possibly flagged as lagging if the packet exceeds a certain age.
As a result, your local simulation is always running at 100Hz (tyres at 2000Hz) and your input is as "real time" as this stepping allows, regardless of network latency.
Of course, only Scawen can explain the exact inner workings, but that's basically how it is (or how I think it is and am reasonably certain of).