To keep things sweet, Villagers are by far the smartest and most complicated entity in Minecraft.
They have an insane amount of AI that, when in large numbers, will bring a server to it's knees.
Our server has customized the behaviour of Villagers so that their impact is lessened, at the cost of some AI. However, Villagers still use a hefty amount of resources so in the case of there being too many Villagers, we may have to find a way to reduce their AI even further or limit them.
If your Villager is in a 1x1 space, they become nerfed. A nerfed Villager retains their ability to restock, and acquire a workstation. For trading, they will work with minimal or no issues.
In general, it's highly recommended to avoid having too many Villagers but for those with Villagers, please nerf all that you can.
Villager iron farms are also not recommended - we have Iron Golem spawners!