So does this imply that division spam is what increases lag? My current experience is with a modified Kaiserreich, which does have a mechanic for significant reduction in divisions. Yet I do experience a lag in late war (post '43). Always wondered what is causing the lag, kinda assumed it was related to whatever data was being stored on hard drives (ie memory file swapping).
Can't comment on your specific case without knowing the system details. You can always run Process Explorer (downloadable from Microsoft) to peek into the details while the game is running.
But, the further along in a campaign you get, the more data about the state of the game needs to be recorded. The divisions is only part of that. You also have things like province/state history (just like the other paradox game titles do). That, too, needs memory to store it all. If you don't have a lot of system RAM, then at some point you run out of available physical memory, and the system will start swapping.
Keep also in mind that modern video boards like to lay claim to a lot of physical system ram to extend their on-board VRAM. My new NVidia 1660 super, for example, comes with 6 GB VRAM on-board. But it still lays claim to an additional 8 GB of physical RAM to extend it's memory pool to 14 GB. And what the GPU gains, is lost to Windows for application data. So, if you have something similar, and have 16 GB RAM installed, well, congratulations, you just lost 8 GB and have only 8 GB physical memory left.
You can view how much you lose through both DxDiag and Process Explorer. In Process Explorer, you need to do a bit of calculating yourself, using the upper limit for the Commit Charge value. This value is always twice the amount of physical memory available to Windows. If you divide that number thus by two, then you know how much physical memory is available to Windows. The difference between that number and how many RAM you have installed is in use by your video board (or any other piece of hardware that has laid claim to a chunk of main RAM).