There are two major metrics for lag... sadly, the "bar" system within SC4 only measures for ONE of them...
These are the two metrics:
1 - Bandwidth... This is the size of your "pipes". Someone who has higher bandwidth can send more data at once, than someone with lower bandwidth. 1.5mbps is your old bandwidth, while 16mbps is your new bandwidth. Higher bandwidth means you download more data at once; not necessarily that the data is faster. With a 1.5mbps and a 16mbps, you still download the data at the same speed; but with the 16mbps connection, you download MORE data at once, so the data arrives MUCH faster.
2 - Latency... This is the amount of time it takes for data to get from one user to another; the lower the latency, the better. A user in NJ will have low latency to a user in NY; simply due to the distance between each other. However, a user in CA and a user in NY will have a high measure of latency because of the distance. The limitation on latency is due to the speed of electricity (which is almost as fast as the speed of light)... if it takes a full second for your data to go from NY to CA, then thats just the way it is...
Unfortunately, the "bar" system in SC4 measures ONLY Latency. It does not measure bandwidth. So if you are in NY, and your opponent is in CA, it doesn't matter how much bandwidth you have, your latency will always be high (which is bad). What this also means that if you are in NY and your opponent is in NJ, you will have low latency, but you can STILL get a bad connection if your opponent's bandwidth is bad... You can have 5 bars, but since your opponent has a 56kbps modem on dial-up, you're still fucked.