What is the cost of many TIME_WAIT on the server side?

Each connection is identified by a tuple (server IP, server port, client IP, client port). Crucially, the TIME_WAIT connections (whether they are on the server side or on the client side) each occupy one of these tuples.

With the TIME_WAITs on the client side, it's easy to see why you can't make any more connections - you have no more local ports. However, the same issue applies on the server side - once it has 64k connections in TIME_WAIT state for a single client, it can't accept any more connections from that client, because it has no way to tell the difference between the old connection and the new connection - both connections are identified by the same tuple. The server should just send back RSTs to new connection attempts from that client in this case.

If you have a lot of connections from many different client IPs to the server IPs you might run into limitations of the connection tracking table.

Check:

sysctl net.ipv4.netfilter.ip_conntrack_count
sysctl net.ipv4.netfilter.ip_conntrack_max

Over all src ip/port and dest ip/port tuples you can only have net.ipv4.netfilter.ip_conntrack_max in the tracking table. If this limit is hit you will see a message in your logs "nf_conntrack: table full, dropping packet." and the server will not accept new incoming connections until there is space in the tracking table again.

This limitation might hit you long before the ephemeral ports run out.

Each socket in TIME_WAIT consumes some memory in the kernel, usually somewhat less than an ESTABLISHED socket yet still significant. A sufficiently large number could exhaust kernel memory, or at least degrade performance because that memory could be used for other purposes. TIME_WAIT sockets do not hold open file descriptors (assuming they have been closed properly), so you should not need to worry about a "too many open files" error.

The socket also ties up that particular src/dst IP address and port so it cannot be reused for the duration of the TIME_WAIT interval. (This is the intended purpose of the TIME_WAIT state.) Tying up the port is not usually an issue unless you need to reconnect a with the same port pair. Most often one side will use an ephemeral port, with only one side anchored to a well known port. However, a very large number of TIME_WAIT sockets can exhaust the ephemeral port space if you are repeatedly and frequently connecting between the same two IP addresses. Note this only affects this particular IP address pair, and will not affect establishment of connections with other hosts.

Findings so far:

Even if the server closed the socket using system call, its file descriptor will not be released if it enters the TIME_WAIT state. The file descriptor will be released later when the TIME_WAIT state is gone (i.e. after 2*MSL seconds). Therefore, too many TIME_WAITs will possibly lead to 'too many open files' error in the server process.

I believe OS TCP/IP stack has been implemented with proper data structure (e.g. hash table), so the total number of TIME_WAITs should not affect the performance of the OS TCP/IP stack. Only the process (server) which owns the sockets in TIME_WAIT state will suffer.