The “seesaw relationship” between thermal conductivity and thermal expansion coefficient (CTE) in most high temperature ceramics has become an obstacle to the design of long-life multilayer thermal/environmental barrier coatings (T/EBC). Due to low thermal conductivity and CTE, defect fluorite type high-entropy rare earth (RE) hafnates have drawn a lot of interest for potential application in T/EBC systems. This work designs and synthesizes the (Dy0.2Ho0.2Er0.2Tm0.2Lu0.2)2Hf2O7 with comprehensive thermal performance and investigates the thermophysical mechanism from the phonon scale. In addition to the lattice distortion effect caused by the point defects of multicomponent substitutional atoms in (Dy0.2Ho0.2Er0.2Tm0.2Lu0.2)2Hf2O7, the oxygen vacancies in the defect fluorite lattice also play a critical role in reducing the thermal conductivity. From microscopic thermal expansion behavior, the low-frequency optic phonons originated from the vibration of RE atoms are the key factors in altering CTE for hafnates. And doping smaller RE ions is beneficial for enhancing the RE–O bond strength and further reducing CTE. The results contribute to the understanding of high-entropy strategic design and suggest that (Dy0.2Ho0.2Er0.2Tm0.2Lu0.2)2Hf2O7 is a promising top layer material in the implementation of T/EBC.