The wrapping options are controlled from '/Configuration/Preferences/Compose/Wrapping'. Here you can turn on/off 'Auto wrapping', 'Wrap quotation', and 'Wrap pasted text', and also set 'Wrap messages at n characters'.

In the Compose window, '/Edit/Auto wrapping' is a checkbox, you turn it on or off here, overriding the default option set as detailed above. '/Edit/Wrap current paragraph' and '/Edit/Wrap all long lines' are not checkboxes, but perform the action when clicked. These are only useful if, in the Configuration page, you have not set 'Auto wrapping'.

Messages that you receive are shown as the sender sent them, but 'soft' linebreaks are added to lines wider than the screen so that you don't have to endlessly scroll to the right if, for example, the sender didn't wrap the lines at all.

Claws doesn't rewrite messages that you receive (as a policy) but shows you them as the sender intended.

HTH

Paul