What to do with an agent of this label that is still offline when the grace period expires.

When checked (the default), the instance is terminated straight away and the reason is logged distinctly from a launch timeout. When unchecked, the instance is kept and the idle termination clock starts from the grace deadline, so a slow but still expected agent gets its full idle window before being reclaimed.

This follows whichever grace period applies: if a template overrides the rule's grace period, the template's discard setting is used with it. It has no effect unless a grace period is configured.