The documentation for the Source engine does a pretty good job of explaining the basics: https://developer.valvesoftware.com/wiki/Latency_Compensating_Methods_in_Client/Server_In-game_Protocol_Design_and_Optimization

The only thing that's really different in a player hosted setup is that you will need to introduce an artificial delay for the host in order to make things more fair. I understand what you're asking, but trying to synchronize everyone so that they have an equal amount of latency is just going to make the game unplayable for everyone. All that effort is still not going to solve some of the annoyances of lag compensation such as players getting shot behind corners etc.