Today in a book I read a sentence similar to this:
The "Conversions" section in the language specification.
Although before I have read this, I would most likely said:
The "Conversions" section of the language specification.
Is the second sentence correct? Can the both (IN / OF) be used interchangeably in this context?
I would go ahead and say that in/of can be used interchangeably in this context.
Generally 'in' is the preposition of place/location and 'of' is the preposition of possession
In this case
"The "Conversions" section in the language specification." - place/location/position of "Conversions"
"The "Conversions" section of the language specification." - "Conversions" section belonging to "language specification"
Both of them sound about right.
But this is not the case usually, 'in' and 'of' are not interchangeable always. If you are interested to explore more about situations using 'in' and 'of' interchangeably, refer to this stack question, am sure it will help you a bit more on understanding the notion.
As far as a document or book is concerned, I'd use them in following way. (Note that this is what I feel and it's opinion based and may not be grammatically sound. This as a comment could have been lengthy and thus I'm posting it as an answer.)
I'd use in if it's a part of a topic or chapter. For instance,
The last section in chapter 3 is jaw-dropping. You just cannot imagine the end.
I'd use of if it's a part of the book itself. For instance,
The last chapter of the book is a bit boring.
So, in your question, ... section in the document seems a preferred choice.
