How do the Rebuild Smart Group Cache scheduled job and the Smart group cache timeout setting interact?
The rebuild job will build any smart groups that are not yet built. It is a good idea to run this job often if you hate your server or being able to see counts on the manage groups page is more important to you than your server not hanging. Otherwise the rebuild groups scheduled job has no benefit.

If you do not run that job then smart groups will be built on demand. This is particularly suitable if you have a lot of smart groups. If group has expired it will be flushed and rebuilt.

Note I DO recommend running the job that flushes expired groups by scheduled job - just not the one that rebuild them all, even the ones you don't really need

I've put up a PR on this https://github.com/civicrm/civicrm-user-guide/pull/397