There are three main factors that play a part in making everyone that plays on your server lag a lot.
The first issue is your internet speed.
If you want your server to be free of lag, you MUST have fast internet. And the server can't be hosted over Wi-Fi. The computer your hosting it on MUST be connected through ethernet, because Wi-Fi is actually pretty loving slow. If you don't have a fast internet connection, everyone else will just be lagging out because their connection to your server is slow due to your slow internet.
The second issue is RAM.
RAM is basically the memory your computer uses. No, I don't mean space on a hard drive. I mean it's the data that your computer is processing while your hosting the server. If you don't have enough of RAM (preferably 8GB or more), your computer won't be able to process much at one time and your server will act very slow as a result.
The third issue is running the server on the same computer that you use to play Blockland on.
This also kind of ties into the RAM issue. If your trying to play Blockland on the same computer that's running your server while your server is running, your server will act much slower. The only way to fix this issue is to run your server on a completely separate computer from the one you use to play video games.
So, to recap. If you want your server to run smoothly, you must have a fast internet connection, at least 8GB of RAM, and you must run the server on a completely separate computer from the one you use to play games on. Even if you choose not to follow just one of these rules, your server could suffer greatly as a result.
If you are unable to get faster internet, more RAM, or another computer, then I suggest buying a dedicated server host. Otherwise, you'll have to live with the lag.
Also, the reason you can't connect to your own server is because, since the server is being run from YOUR computer, you have to hit "query LAN" before joining. This is also true if another computer in your house is running a server that you wish to join.