Hello All,
To add simple user from settings section of admin panel means one can allow to user to access the admin section of the blog and contribute to the blog. It is depends on the user role which is defined. One can create any number of users to their blog.
To add blog user from settings -> privacy -> add user means that added user can only read the blog which is password protected. But can not access the admin panel of the blog. They can not contribute to the blog. This is paid service by wordpress and one need to purchase it upon the requirement.
Thanks,
Shane G.
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