Interpolations

Both the PredictionManager and NetworkObject have interpolation values, but with separate objectives

PredictionManager interpolation is not the same as NetworkObject interpolation.

Interpolation on the PredictionManager holds a number of states in queue as interpolation while NetworkObject interpolation handles graphical smoothing after running states.

A prediction interpolation of 0, be it client or server setting, means that states would be run soon as they are received. Most games will not use 0 interpolation as it's generally best to have at least 1 state in queue to compensate for latency. For every 1 interpolation added is like adding latency to when spectated states are run, equal to (interpolation * TickDelta).

For smoothing graphical objects beneath your NetworkObject see NetworkTickSmoother. This component allows you to configure how the object is interpolated for owner and spectators.

Under the scenario your TickSmoother graphical had a set spectator interpolation of 2 and your PredictionManager an interpolation of 1, the spectated graphical object would take 2 ticks to get to it's goal after the PredictionManager ran the state 1 interpolation later than receiving it.