timeout is used for the amount of time, in seconds, for DirectAdmin to try to do whatever the client is asking. When that time is used up, DirectAdmin will give up and show the user an error. The important commands, such as creating users will override this timeout, as stopping half way through the creation process could cause problems
max file upload size is for uploading files through DirectAdmin's filemanager or for uploading skins. It prevents people from uploading files greater than this value (in bytes).