..:: tchncs ::..

I assume the part in the TOS refers to an experimental feature of Synapse that allows setting a message retention time. I think what it does is to set a deleted flag in the DAG and maybe overwrite the internal storage...but deleting anything on Matrix is surprisingly difficult and this experimental feature comes with a big disclaimer in the config file.

However, the ever increasing storage requirements are a serious issue for large public Matrix servers, having resulted in some of them shutting down permanently and the tchncs one had to do expensive hardware upgrades solely because of that.

I think that's for messages your client hasn't received from the server yet. If you don't login for a long time but keep getting messages that's how long they'll keep them.

Once all your clients have the message the server doesn't need to keep it any longer. I'd expect them to discard it immediately after that, but I guess they don't