The part about your wrist hanging on the steering wheel is correct, but your arms should not be fully extended... unless you're a gangsta from the 90's.
For track days you should have plenty of bend in your elbows. Best way to ensure you have enough bend is to hold the steering wheel at 9 & 3 and be able to rotate the steering wheel completely to either direction without taking your hands off the wheel or feel that your arms are stretching so far that you can't complete a full turn. Remember that your arms will cross over each other during this scenario so if your arms are already extended in the default 9 & 3 position there is no way you can maintain control of the wheel when they're crossed over.
You can achieve this in the M3 one of two ways. Move the seat closer or extend the steering column out. Depending on your height it's likely the combination of both. You don't wanna be to close to impact proper foot position on the pedals and you don't wanna put your seat too far back that you're over extending your legs. So start off by moving your seat forward enough until your feet are in the proper position then extend the steering column out for proper hand position.
For DD you can reset the steering column all the way back and position your seat comfortably but I would never suggest that you are far enough that your arms are fully extended. You need to be prepared to react to an emergency situation and if your arms are fully extended you risk losing proper grip of the steering wheel during emergency steering.