History settings is divided in two settings.
Max days is the days a deleted file is saved before deleted on the server
If the setting is set for e.g 60 days, deleted files will be saved for 60 days before it get's deleted on the server.
* There is a retention on the server for 60 days where the file still is available to be recovered.
Max versions is how many versions of a file you keep.
A file can be saved multiple times during a day, and every version take disk storage.
The setting allow you to clean old versions to clear the data usage.