Post reach generally describes how many people saw your post on their feed, while post engagement describes how many people took an action from that post. In the case of Facebook specifically, engagement comes in the form of "like," "love," "comment," or "share." In my research, it's best to aim for a 10% engagement to reach ratio. So, if a post has a total reach of 1,000 views, then engagement should be around 100 actions taken.
These two terms highlight different things, and it's important to understand both reach and engagement, to better identify any problems in your campaign or content. For example, if your reaching thousands of people, but Facebook insights shows that your engagement is only at 2%, people are uninterested by your campaign and something needs to be changed. A low reach to engagement ratio shows that users are scrolling right by these posts, unaffected, so the social media team for that business should revamp their content strategy before putting more time and resources into Facebook advertising. If your posts are getting upwards of 20% engagement, this is a campaign that is really engaging the users who are seeing it, and is worth investing paid ad into so more people can see it. Posts like these should also be repeated and repurposed to continue engaging the audience. Facebook Insights, and analytics for all social media platforms, should be the data that drives your business' content strategy and informs decision making.