I am aware that there are potentially 100s/1000s of people that have experienced the same issues that I have had here.
That is to say, the Connection Timed Out Error. 99% of the time just going through the motions will work to connect you to your friends Minecraft server i.e. Port Forwarding, Java in the firewall, External IP with 25565 port.
After consulting an IT technician over the phone for 3 hours (yes 3 hours) using Wireshark and staring at TCP packets, error messages and Microsoft forums for 5 days...I have found a fix for the 1%. So to answer my question above, it seems as though MC Realm servers simply accounted for congested connections, bad packets and TCP errors by enabling these settings...
So without further ado, here is:
CONNECTION TIMEOUT ERROR FIX:
DO AT OWN RISK
1. Open Command Prompt as Administrator
2. Type: netsh int tcp show global
It should look like this:
TCP Global Parameters
Receive-Side Scaling State : enabled
Receive Window Auto-Tuning Level : normal
Add-On Congestion Control Provider : default
ECN Capability : disabled
RFC 1323 Timestamps : disabled
Initial RTO : 2000
Receive Segment Coalescing State : disabled
Non Sack Rtt Resiliency : disabled
Max SYN Retransmissions : 2
Fast Open : enabled
Fast Open Fallback : enabled
HyStart : enabled
Pacing Profile : off
Most of the time it will look like this, but there are exceptions. Window Auto-Tuning and congestion control may be different. If you want to change the settings here. Just google the netsh command for those. We want to focus on ECN and RFC. In short, they help in making that TCP packets get analyzed correctly and that the TCP handhake happens correctly. These need to be enabled on both the server pc and the client pc. If you have any issues with this slowing down your internet connection then tough cookies.
3. Enable ECN and RFC separately with the following commands: