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This happens intermittently as DynamoDB streams rotates shards every 4 hours, which in turn causes Lambda to re-discover the shard graph which can lead to spikes in latency, as you've observed.
This blog post discusses in more detail: https://aws.amazon.com/blogs/database/build-scalable-event-driven-architectures-with-amazon-dynamodb-and-aws-lambda/
This is something that the DynamoDB and Lambda team are aware of, and plan to reduce, however, I have no ETA when this improvement will be available.
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Since this answer is ~a year old, any update on whether this has been improved or fixed? And is there a recommended way to reduce the IteratorAge spikes?
This has reduced greatly, since DynamoDB launched ShardFiltering