While both users and clients have usernames and passwords, the difference is quite big in the functions that they can access.
System users are divided into 3 roles: System administrator, Account manager and uploader.
System administrator is the user with all permissions active. They can tweak any part of the system, change any setting, view the full system logs, create users, clients, groups, files categories, etc.
Account managers are similar to administrators, but they lack the possibility to create or edit other users.
Uploaders are much more limited. They can manage categories and files, but will not be able to create users, clients or change settings. In addition, they can be individually limited to upload files to certain clients only.
Clients on the other hand access the system by default by viewing their available files list. They can be allowed to upload files if the setting for it is enabled, but won't be able to see private groups, categories that they don't have any files on, manage files for others, etc.
Clients can be created by administrators and account managers, but an option can be enabled to allow self registrations. This is specifically useful if you plan to have a public files repository.