What event tracking means
The unit of measurement is the event: a named record describing that something happened, accompanied by parameters that spell it out. When someone presses the download button on a catalogue, the tool stores an event name and, alongside it, data such as the title of the document or the section of the site the press came from.
Three things that get confused daily are worth keeping apart. The analytics tool is where the data accumulates and gets read. The tag manager is the vehicle that ships the code without anyone touching the template. The data layer is the intermediate store that this vehicle reads values from. Event tracking is the decision that comes before all three: which actions deserve to be recorded, and under which name.
An event is not a conversion either. Every conversion is recorded as an event, yet most events describe behaviour with no direct commercial value, such as scrolling down the page or playing a video. Marking an event as a key action is a later and deliberate step, taken by someone with business judgement.