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Client runs the simulation based on player input and latest information from server. Whatever you do is reflected instantly on your client so there's no input latency, but the overall state is an estimation.
The server runs a simulation on it's own based on the latest inputs from both clients, this is the one true state that can trigger things like goals and boost pickups.
The properties for the cars, ball, boosts etc. is communicated back to the clients, which match them against their own estimation.
If the state differs, the corrections are applied bit of a transition animation so things kinda rubber band around instead of blinking, which can be unnoticeable with very low latency
To compensate for the latency, the client keeps rendering the other players doing whatever they did in the last tick. E.g. accelerating forward.
As long as ticks come reliably at a fast pace, there shoul...
I am not aware of anything on the server that would cause you to turn without having pressed turn recently. If you have a really bad connection the server will zero-out your inputs to limit how far you move while disconnected.