Employee settings tells the system which employees, classified by type, department, cost center, etc. the administrator should be able to view. The permissions work on hierarchy. If an administrator has access to one employee type and no departments or cost centers, that administrator will have access to all employees under that type. If an employee is under the administrator's access in type or department, that administrator may look the individual up and see demographics, work history benefits, or any other instance allowed on page settings.
If the setting on the General Settings tab called 'Limit this Administrator's access to employees by excluding any employees who do not meet ALL of the Administrator's Employee Permissions' is enabled, it reverses how this section works.