There are two trains both going to the same destination. You can shriek now. LAG is a generic term that describes the scenario in which data does not arrive to its destination in time to be processed in a meaningful or correct way. Networks themselves can also cause lag. You might have an awesome connection to your Internet Service Provider, but if they do not have a great connection to the Internet themselves, it won't matter one bit.
Lets express it in meaningful terms.
By the way, This example is grossly over-simplified but the concept is accurate. Maybe not Sherlock, cause perhaps your ISP also leases out T1 internet access to 500 other clients. A single OC12 equates roughly to 400 T1 connections. Aye, there's the rub. ISP's sometimes oversubscribe their service just like airlines sometimes overbook flights.