ECS and object users vs IAM

Hi there, 

I am struggling to understand the difference between object users and the create user option under IAM. 

I have created users directly under IAM menu, then assigned roles and policies and not been able to get them to create buckets and users (s3Full and IAMFull), despite having the policies to do so. we kept getting Access Denied errors

creating a user under object users & using those credentials I could sucessfully connect via terraform and was able to create a bucket in question. 

how do IAM settings apply to users? as you can have the same name but different access keys under the same namespace, it is confusing to fully understand how these are meant to work and struggling to find a simple answer in the documentation.