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.