Close conversations after non-engagement in waiting state - > Configure auto-close after inactivity in the workstream.

Change auto-close duration for wrap-up state - > Configure channel state by using the web API.

Dynamics 365 Contact Center distinguishes between inactivity while a conversation is waiting and the lifecycle behavior of a conversation that has entered Wrap-up. For supported persistent channels, the workstream exposes an Auto-close after inactivity setting. Microsoft states that a conversation remaining in Waiting for longer than the configured inactivity interval is automatically transitioned to Closed. This capability applies to persistent chat, SMS, social, and Microsoft Teams channels.

Wrap-up closure is controlled through the underlying channel-state configuration. Microsoft documents that administrators can modify the auto-close duration for conversation states by updating the Channel State Configuration data. The value can be managed through Power Apps or programmatically through the supported Web API when an organization requires a business-specific timeout rather than the standard lifecycle duration.

Consequently, waiting-state inactivity belongs at the workstream level, while customized wrap-up state timing is handled through the channel-state configuration/API mechanism.

The source exhibit on page 30 confirms these two selections.

Study Guide reference: Implement channels - > Configure chat and digital channels - > Configure persistent conversations and conversation lifecycle settings.