I created a segment based on the relevant Category and Action of this event but I'm not sure if I should filter it by users or by sessions- can someone please explain the difference.
Google Analytics organize data hierachically: At the very basis hits represent page views or any other events you specified that can be triggered separatly by user. These hits are encapsulated in sessions (of usually 30 minutes), which in turn are summarized to users depending on cookie information.
Now, imagine a scenario, where a website tracks the two events that a user clicks a video play button and the sign up button for a newsletter. Some users might have clicked both buttons during one session, while others might have clicked either button during different sessions.
When you segment for the video play button event by user and take a look at the important events report the metrics shown to you will include both events from both groups. Whereas, when you segment for the video play button by session the important events report will only list the newsletter event from those users who triggered both events throughout the same session.
You might see something like this:
Segment by user:
Segment by session:
As for your second question and the reply to @Stephen Ostermiller I think using segments is indeed closest to what you are looking for. Use a segment that filters for the event you are interested in and segment by user. The number of users in the overview report than represents the number of users that triggered your event at least once.
You can find a similar discussion here