Minecraft Version: 1.16.5
Forge version: 36.2.34
Mod Version: does_it_tick-1.16.5_v2.0.0

So I was highly suspicious that the config options was not actually working. To test this, I went into a singleplayer world and set
(LivingEntity) Max Horizontal Tick Distance [Default 64] to 10 in both does_it_tick-common.toml and does_it_tick.toml in \config\.
In the image below, I have set up a way point to accurately illustrate distance and all these mobs in the illustration still move despite the config option change.

Additionally, I disabled optimization of fluid ticks, yet cobblestone generators stop working once you get a distance away from them and come back. The only way of resolving this is to replace the buckets of lava.