How target size works
Switch on Target size and type a size in KB (200 by default). The encoder tries several qualities and keeps the highest one whose file fits, and the panel shows the result, e.g. WebP q 73 · 194 KB ≤ 200 KB. 1 KB counts as 1000 bytes here, so the file fits a limit counted either way. With Save all, each image gets its own quality.
The free way: the quality slider
Without Pro, the quality slider does the same job by hand. The result panel shows the file size as you move it, so lower the quality until the size is under the limit, then check small text in Compare. WebP at quality 75–85 is a good start for screenshots.
When it can't get small enough
Quality has a floor. If even quality 1 is over the limit, the panel says so, shows the smallest size it reached and saves that file. Pick a smaller output size, e.g. 1600 × 900 instead of 1920 × 1080, or crop tighter. PNG is lossless, so Target size works with WebP, JPEG and AVIF only.