Hey Guys. Didn't realize I made the top 10 list for entities -_-
My bad.
The screenshot from Crafty above of the caves is from under my base. I didn't realize not lighting the underground up would cause any issues. I was quickly reaching 250~ entities and couldn't figure out why. Crafty suggested lighting up everything under our bases. While I don't necessarily like this idea, it may be the only solution until Mojang gets their stuff together.
I dunno if I'm the only one who doesn't light everything up, but this is in part because I'm using a shader so I can just carry a torch in my off hand to see where I'm going. Another reason is to make my area a huge mob grinder/arena and to make it as dangerous as possible. The other reason is to keep x-rayers and cheaters from finding me easily.
I may just try to find a way to trap the areas enough to keep mob counts low. I'll see how it goes. If not, maybe I'll cover the underground in a lot of lava.
So if others aren't lighting things up and are unaware that it is adding to the server lag like I was, then try lighting everything up.
This may not be as big of an issue when simply exploring, but when working around the same area, lighting up the underground areas around it helps. Above ground doesn't seem to be an issue since daylight burns most mobs anyway.