This question is a combination of a technical and operational question. You first have to respond by defining what lag is. Then, describing the steps you use to minimize the delay will assure the interviewer that you can address any Lag issues in your game designs. Knowing the reason behind the interviewer's question makes it easier for you to respond accurately and with the information the interviewer is seeking.

"In the context of video game design, lag is the time between when the player takes action or provides input to the game and when the game responds to the player's input. Players expect an immediate response to the actions they take using their controls. Any lag will diminish the player's experience with the game. The two most common ways I can reduce lag in a video game is to first ensure that the performance setting is appropriate for the action required by the game. I can also design a game to be compatible with the types of controls the player will use. These vary depending on the platform and can include hand-held controllers, keyboards, mice, or other input devices."