There are two types of events in Lightning Components [Aura Components]
- Component Events
- Application Events
Let me walk you through these event types briefly one after the other.
When we have two components (or multiple) in the hierarchy and when we need to send information from child to parent then we will be using Component Events.
When we have multiple components which are not in the hierarchy and if were to send info from one component to a different component altogether (which is not within the hierarchy) then we will be using Application Events.
It's always suggested to use Component Events first before we use Application Events because when we have multiple Application Events we need to extremely careful, as something is misconfigured then the event listeners in the other Components also(which is not required) also gets trigged.
This is the difference between Component Events and Application Events.
Hope this was helpful!