In the Sitecore 9.2 release it is mentioned in this post that a new feature is available:
Limit and reduce size of xDB
I haven't been able to find how to enable this in official documentation. Does anyone know how to do this?
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This is not from a configuration standpoint.
Before Sitecore 9.2 it was not easy to remove old data that isn’t relevant anymore. (Unless you are using a 3rd party integration)
A new API has been made available to maintain and purge data withing xDB. This can help to reduce the size of the xDB database and gives you more control on what data you want to keep. It is possible to write a custom tool to periodically and automatically remove xDB data.
In version 9.2 and later, xConnect allows you to delete contacts and all associated data in xDB if you choose to. So, you have the ability to remove the data that isn't useful to you anymore. https://doc.sitecore.com/developers/92/sitecore-experience-platform/en/deleting-contacts-and-interactions-from-the-xdb.html
But, you need to do this by writing code, and so you would need to work with your Sitecore architect and developers to carefully plan this out for your implementation. And again, this is only an option for the newer versions of the platform.