As can be seen in the attached screenshot, there is no mention of the existence of log rotation's or how to implement it.
It currently states for log timestamp format "see strftime manpage for details" and for log filename format it states "%s=Server, %c=Channel, %n=Network"
The existence of log rotation functionality should be clearly stated underneath the log filename format line. Such as with "to have the logs rotate use strftime notation in the log filename"
And strftime notation itself should be documented in xchat and reachable from that window via a single click (say, via a ? icon near each of the two boxes which you may press to view a list of supported strftime notations supported by xchat).