nginx Has Many Directives
nginx includes a bunch of directives, & the docs even include an alphabetical index of directives.
Directives are a set of instructions.
The directives I'll note here deal specifically with instructing nginx about timeouts in two ways: (a) client-side, between itself and the client-world (b) server-side, between itself and "backend" proxied service(s).
As a one-line review, nginx here lives between client requests and servers - client requests get to nginx and nginx "passes along" requests to servers. Servers respond, send the respond to nginx, which "passes along" the response to the client.