Overview of Source engine networking: https://developer.valvesoftware.com/wiki/Source_Multiplayer_...
Ways they combat latency: https://developer.valvesoftware.com/wiki/Latency_Compensatin...
Lag compensation (server): https://developer.valvesoftware.com/wiki/Lag_compensation
Prediction (client): https://developer.valvesoftware.com/wiki/Prediction