Setting a status in Teams can be useful if you want to let your colleagues know you are not at your desk, in a series of meetings or on the school run! It can be a great tool when remote working to set expectations when colleagues should expect a reply.
If you set an Automatic reply from Outlook, this will update your Teams status, but you can manually change it.
To update your status in Teams, click on your profile picture on the top right of Teams and choose set status:

You can now add a message as your status and let people know where you are or if you are unavailable.

If you tick the Show when people message me option, it will show your status as they type a message in either Teams chat or channel messages. This will also happen if you set your out of office from Outlook:

A useful tip is to use the expiration feature. This will clear your status after a certain period of time. So if you are on the school run and forget to remove your status, Teams can do it for you automatically:

You can also schedule your out-of-office from Teams, which will sync to Outlook calendar. It provides the same options to send different replies externally or only for a certain period of time:
