TL;DR: RPC latency is the time it takes for your application to send a request to a blockchain node and receive a response. It is measured in milliseconds and directly impacts how fast your dapp feels to users. High latency means slow balance updates, delayed transaction confirmations, and missed trading opportunities. Low latency means a responsive, real-time experience. RPC latency depends on network distance, node performance, request complexity, and the quality of your infrastructure provider.
The Simple Explanation
Every time your application interacts with the blockchain, there is a delay between asking the question and getting the answer. That delay is latency. When a user opens your wallet app and waits half a second to see their balance, that wait is primarily RPC latency. When a trading bot sends a swap transaction and it takes 200 milliseconds to receive confirmation that the node accepted it, that 200ms is latency. The number might sound small, but in blockchain applications, especially DeFi, gaming, and trading, those milliseconds add up to real differences in user experience and financial outcomes.
Latency is not a single number. It is the sum of multiple sequential steps: DNS resolution (looking up the endpoint's IP address), TCP connection establishment, TLS handshake (encrypting the connection), request transmission, node processing time, response transmission, and response parsing. Each step adds time. A request to a node in the same geographic region might complete in 20-50ms. A request to a node on the other side of the world might take 200-400ms. The same request to an overloaded or poorly maintained node might take seconds, or time out entirely.

Why Latency Matters More Than You Think
For user-facing applications, latency is the single biggest factor in perceived performance. Research across web applications consistently shows that users notice delays above 100ms and start abandoning interactions above 1 second. Blockchain applications are no different. If checking a balance takes two seconds because your RPC provider is slow, users will assume your app is broken, not that the infrastructure behind it is laggy.

