Help Cloth does not follow animation

[adev eloper]

As there is a huge gap between computations the collisions don't run smooth. This results in the cloth penetrating deeper into the character mesh and eventually dropping to the ground.

This is exactly what tunneling is. It is a fundamental consequence of how time is modeled in computer simulations as discrete chunks. Thin objects (as the surface of a mesh collider) make it worse. Using distance fileds should alleviate it. Keep in mind that if your mesh has thin parts (like a character with very thin arms) tunneling will still happen, and then the only solution will be to reduce the simulation time step (that is, reducing the gap between computations, as you described it).