Fan Reach is the number of fans who have SEEN any given post. Facebook breaks Fan Reach into two kinds, Fan and Organic. Fan Reach are posts that are seen by fans and Organic Reach are post that have been seen by both fans and non-fans. For a post to be successful you want to make sure it's Organic Reach is larger than it's Fan Reach. If this is true you know you are reaching people that have the potential to become new fans.
In the article 6 Facebook Metrics Marketers Should Be Measuring, http://www.socialmediaexaminer.com/facebook-page-metrics/ Emeric Ernoult says
"The per-post fan reach is probably the most important metric. It’s a key indicator. It helps you measure the appeal of your content to your audience and appreciate the quality of your audience."
Engagement is the number of people who have CLICKED on any content in your post. According to Likable Social Media it is the Storytellers (Facebook term) that are the most important kinds of Engagements on your posts. Storytellers are part of the Engagement group that do something to engage their friends with your post, know as "people talking about this" by Facebook. These posts are the most successful because they spread your word to non-fans and hopefully convert them to fans.
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