Keyboard response rate is too low, and character suggestion popups appear periodically
The characters appear when a key is held down, it's the same as on an iPhone to make it easier to type accents and things. Those are alternative S characters.

You can turn it off using:

defaults write -g ApplePressAndHoldEnabled -bool true


in Terminal.

However, that doesn't explain the overall response rate, just the characters.

For the keyboard rate check Accessibility in System Prefs. You might have Slow Keys enabled in the Keyboard section. You might also want to check under options at the Acceptable Delay in that panel.