The chat queue length is based on wait time rather than the absolute number of people in the queue.
It is important that visitors can't start an engagement when agents with a necessary skill are not available. A skill can be provided with a max-wait-time. An on-line engagement will not be displayed when a visitor is targeted by a campaign if their estimated-wait-time is higher than the max-wait-time of the skill. This is to ensure that visitors do not click an engagement and end up waiting for a long time to be answered by an agent.
By setting the "Max wait time" to 0 seconds you can avoid having any visitor queue. When all agents are busy on existing chats, new visitors, based on your configuration, will not see the engagement or will see the off-line engagement.
Ignore Max Wait Time
Having said this, you may wish to override this setting for a particular engagement, and thus allow the engagement to be displayed to a visitor regardless of their calculated-wait-time. In the Engagement Studio, edit the engagement you would like to ignore the max time time. On the Studio step, the option, "Ignore max wait time," means that the engagement will be displayed and visitors will be able to click and wait for an agent, as long as at least one agent is online.