I'm not actually certain lag is really the appropriate term, but I am not fluent in the terminology. There was no significant delay between my input and the character's actions, which is what I would generally call lag in, say, StarCraft, instead it was something that I only ever noticed in Battle.net for Diablo II. While the game continues as normal, the game stops processing any hits taken or damage incurred - the enemies' attack animations play as normal and your character can do whatever he normally could, but nobody can damage anybody else.

The problem is that the attacks still connect, and the game will eventually realise this, resolving every action instantly. This is why if you realise this is happening, you should run away immediately and quaff health potions. Unfortunately, in my case it was too late, and I took twenty seconds worth instantly, even though by then I'd ran far away from the battle.