Engage allows you to categorize contacts by whether they are an active client or a prospective lead.
If you have participated in any type of paid work for a customer, you should consider them a client. A lead prospect is a contact you're hoping to convert into a paid customer.
Effective engagement and follow-ups for a paid client may include thanking them for choosing you for a project or asking for a review or a referral. Until you gain the trust of a lead, you may need to approach them with different emails, like letting them know of your expertise or potential value for them.
On the Contact list page, you can toggle the category by clicking on the Client/Lead dropdown and choosing the appropriate category.