It will reduce lag of course because you are just sending info to a server then getting info back instead of to the server then to the player then back to the server then back to you.
Big but is Xbox one doesn't have guaranteed dedicated servers. The option they are giving developers is just much cheaper then normal but still for some its too expensive. Like Need for Speed Rivals which just released and does NOT have dedicated servers on xbox one or PS4. So far every game that does have dedicated servers has them on both consoles and lets hope that happens for a lot more titles.
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Thanks for the info.