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Latency, also known as Lag, is a game phenomenon that can cause "rubber-banding" or other forms of desynchronization with the game world. For a technical description, please see Wikipedia's page on Lag.

Guild Wars has a Performance Monitor that graphically shows the quality of the user's Internet connection as reported by the ping times to the Guild Wars server. NCsoft states that the Performance Monitor is not an accurate measurement of the latency of your connection.

Specifically, the Official PlayNC Knowledgebase only addresses latency with regards to how latency can affect achieving the Survivor Title. While death by latency causing catastrophic in-game events is not limited to pursuit of the Survivor Title, and may have other effects including loss of morale bonuses, there is nothing built into the game to reduce the lag penalty.