You need to set up an environment including multiple machines in the same role. The test controller organizes the tests in buckets of 10 or 100 tests (linked to how much tests you have in your test run) and sends bucket for bucket to its agents/machines.
When you change the parameter in your Test Settings, then the tests will be executed in parallel. But the hub isn’t able to realize that it should wait, when all instances of the grid are already in use, before broadcasting the next test request. Because of that, the next test will fail with timeout error, because the other tests took longer than the timeout.