What is the difference between systemd's "user" and "system" units/services?

systemd runs a service manager for the system and a service manager for logged in users. System units can only be started/stopped by UID 0 and system services are run as UID 0 (except if you set User=), the user units can be started/stopped by the respective user and user services are run as the respective user.

To talk to the service manager of the user, use systemctl --user. In your example, you would have to call systemctl --user daemon-reload in order to reload the user units.

Note that user units cannot depend on system units and vice versa.