Targeting decides what a discount applies to; eligibility decides who can use it. Both default to everything and everyone.
Targeting
A percentage or fixed-amount discount can apply to all merchandise, or only to specific products, collections, or categories. You can exclude items already on sale and require a minimum eligible merchandise subtotal or eligible item count. For a targeted discount, these minimums use only the matching lines, not the whole cart.
Customer eligibility
A discount can be open to everyone, limited to specific customers you select, or limited to customer groups. You can additionally restrict it to a customer's first order, cap total redemptions, and cap redemptions per customer.