Different time intervals set in the Sequence Editor affect the simulation heavily, as I think you would expect. It is in fact an indicator of the accuracy level of the simulation. The smaller the Time interval you use is, the more accurate your results are, but they are also more time consuming.
If you have a path with 3 locations, where moving to each location takes 1 second, setting a time interval of 2 seconds means the robot will go straight for the 2nd location, so your TCP track will be a straight line from the first to the last via.
This is also true for other applications in PS, for example Collision detection, where a very large time interval could cause a robot to skip over a collision entirely.