Engagement settings
To manage a site's engagement settings (what you consider to be an engaged visitor), go to Manage site > Settings > Engagement.
Bounced
Set the number of seconds under which you consider a session to have bounced. If a session has a duration shorter than this and only 1 page view, the engagement level will remain at bounced.
Engaged
Choose the minimum duration, and the minimum number of page views, that will be considered to be engaged. Any sessions with a duration longer than this, or with this number of page views or greater, will go to the engaged level.