A user is a person who logs into Runn and can access data. They may also be listed as a resource and have work assignments for your projects on Runn. Although they are the same person and connected via their email address, they act like two separate entities in Runn.
Removing a user from the Manage > Users list will remove their access to Runn. They will no longer be allowed to log in and access your Runn dashboard or timesheets. All the shared custom reports they have created will all be deleted.
However, you will still see their name on the People Planner. All the person details, assignments and timesheets data will remain.