How to change the simulation distance on a Minecraft server
An option added in 1.18 server managers can now set the simulation distance on servers. This is how far-away actions happen. So if you have yours set to 5, then spawn a creeper and walk 5 chunks away, that creeper will stop moving. It will lose its AI. This can help with server performance.
By default your server will be set to 10. This is just what Minecraft has servers default to. To change this we're going to head to Server Configuration under Game Tools. Here we're looking for SIMULATION-DISTANCE. If you can't find it press CTRL and F and search for SIMULATION-DISTANCE.
You can set this value to what ever you want. This will add more stress to your server, so we don't recommend you set it too high, as you will cause lag issues.
A chunk is 16 x 16 blocks.