@Bhushan Mistry Duplicate post, answered here - https://learn.microsoft.com/en-us/answers/questions/1318862/what-does-latency-show-in-azure-ad-sign-in-logs
Latency ( in milli seconds ) is defined as - time for us to send back response to apps, includes dependency calls, STS processing time or we can define as time takes to process sign-in to Azure AD or latency time in Sign-in report is time spent in STS (Azure AD Authentication) + time spent waiting for dependencies like call to other service.
Let me know if you have any further questions, feel free to post back.