Adjusting the postion of chapter numbers in the Tufte-Latex class

You found the relevant section, the display option is causing this numbering style. Change it for example to hang to get a hanging label, such as with \section.

titlesec is the package providing such headings. The manual explains options and syntax.

Besides the command reference for \titleformat and \titlesection this documentation provides a set of examples in its appendix, which produce the well known appearance of standard LaTeX headings. This is a great start for starting customizing headings.

You can also make it similar to the \titleformat{\section} lines in the class file, just changing sizes and spacing.

Keep in mind, if you copy commands from a class file for using in your own preamble, use \makeatletter before and \makeatotherafterwards, if a macro contains an @ symbol.

Since Forkrul Assail's request wasn't answered, I tried to solve it myself. I ended up copying the definition from tufte-common.def and adjusting it with the [block]-shape instead of [display] and increasing the horizontal separator from 0pt to 1em. So I put the following in my preamble:

  \titleformat{\chapter}
  [block]% shape
  {\relax\ifthenelse{\NOT\boolean{@tufte@symmetric}}{\begin{fullwidth}}{}}% format applied to label+text
  {\itshape\huge\thechapter}% label
  {1em}% horizontal separation between label and title body
  {\huge\rmfamily\itshape}% before the title body
  [\ifthenelse{\NOT\boolean{@tufte@symmetric}}{\end{fullwidth}}{}]% after the title body

Ending up with this:

If someone comes here and wonders how to get chapter numbers you just need

\setcounter{secnumdepth}{0}

in your preamble.