It is basically the source-engine code with extrapolation. Valve has decided against it.
Prediction is only possible for the local player and entities affected only by him, since prediction works by using the client's keypresses to make a "best guess" of where the player will end up. Predicting other players would require literally predicting the future with no data, since there's no way to instantaneously get keypresses from them.
(source)
For example, with extreme extrapolation values, you get error prone, warpy players
Correct. Especially in a game like CS:GO where there are instant-slows such as tagging by a grenade this can lead to players get shot before they cross a corner, or people warping around corners and back.
It is extremly affected by even losing a single packet - this can make enemies peek when they weren't, and make your shots miss easily. With the source-engine networking these things are not as bad, and actually don't happen.
So you're tired of dying behind walls, or dying to an enemy who hasn't even appeared to come around the corner yet on your screen? This netcode prevents that.
But makes lagging so much worse. Believe me, the people that lag a little bit now? Either they will be unable to move, or will warp around like crazy. And if you lag now, good luck hitting anything with that wonderful code.
Also, imagine the ping-packet gets misrouted - instantly the "halfping"-variable is wrong, and you get hits when you weren't on the target, and miss when you were. it is not as reliable.
If you are tired of dying when behind cover? Get everyone to us cl_interp 1. Tired of the peekers advantage? Use cl_interp 1.
If you lag even a little usually, I'd recommend the default value of 2.