User in instance vs database

I'm database novice and would like to get confirmation or correction on my understanding of the difference between a user under a sql server instance vs a user in a sql server database. For example, a user can be added under Instance-->Security--Login and a user can be added under Instance-->Databases-->Database Name-->Security-->Users.

Is the difference that the login under the instance is used for logging into the database via management studio and the user under the database is for database access? Also, is one dependent on the other? So if I want to add a user to the database, they have to be added to the instance first?

Thank you