As you can see, here is an online ranked match with 4/5 bars of connection. With even just 1 less bar, the connection is already pretty bad. People also develop semi-lag tactics like here, the taki keeps on usin 9KKK with Taki, and to block the low you have to duck atlease a second before the move actually comes out.
With less than 4/5 bars, you should just quit the match and not play at all.
edit: for people saying you don't "see" any lag, of course you don't. The game views at normal speed, but your inputs LAG BY A FEW SECONDS. Imagin at 3/5 bars, you push guard. 2 seconds later, your character on screen guards. That's what I'm talking about.