What's the difference between an event type and an event? An event type is simply a general description of an event you want ...

What's the difference between an event type and an event?
An event type is simply a general description of an event you want to associate a label with.
The related event is a specific occurrence of that event type.
For example, let's say the event you want this label to be associated with is the end of someone's employment in your org. Here's the flow:
First, you'll create event-based labels with names that describe what items you want the labels to be applied to (such as "Employee records" or "Immigration documents").
Then you'll associate these labels with the related event type "Employment ended."
The labels will then get applied to various user items in your org, like email and docs.
If someone ends up leaving your org, you'll create an event for that situation. This is where you'll specify the event type ("Employment ended"), the date the user left, and the IDs associated with that user's items (such as their employee ID).
When created, that event will detect all the user's items that have these labels applied and then set the deletion date for those items based on the retention period you chose for the labels.