ngowerjo and Papa & Mama Bear
Thank you greatly, both for pointing me in the direction and helping me solve this (at least solved for me). I have replaced the router and I can confirm that the 5-10 second delay for trackpad and keyboard has disappeared on both my laptops with new router.
I was using a Xiaomi Pro and a TP-link WDR6500 (Chinese version).
I have switched to an ASUS RT-AC86U - Merlin firmware with VPN applet installed. I did not fully test the setup, before switching firmwares, but in the small time I had before the firmware change, I noted there was a slight half a second delay, but that the Macbook Pro no longer had the unacceptable freeze situation.
It works out for me, as the new router seems to achieve five times the download speeds of the previous router, I now have far more control over my home network, and it was not too expensive (735 RMB).
However, this should never have been an issue and this glitch in Apple OS should have been more easily diagnosed (I spent literally days trying to solve this) and fixed within the software so that we the consumers need not fork out extra cashola for a router change!
Bad Apple? Yes.
I wish those of you out there with a similar trackpad freeze situation success before it drives you too crazy.
Stay safe and well - and Thanks