In the Digital Foundry review, they saw huge performance dips when just running in small circles, when standing still had no impact. As in, on a high end system, performance dropped from ~90FPS to mid-60s, just by moving in a tight circle (i.e. not enough to actually move the camera).
That sounds a lot like pathing to me, though other things could certainly be causing it.
It just seems like something there is poorly optimized and it shows when there are a lot of NPCs around.
And the game essentially uses last gen tech (DX11, no RTX, performance drop on Vulkan, etc), so it’s not pushing the boundaries all that much, so it’s probably not fully optimized. It should be feasible to optimize it to at least not get FPS dips when moving vs standing still in towns, if not get a bit better performance on older CPUs (e.g. Zen 2 CPUs like 3600 and whatever is in the Steam Deck). It runs pretty well, it they could probably get a bit more.