Security = system settings, i.e. what users on that specific PC can do
Sharing = what other people can do, based on those permissions
So, as a very simple example, the security settings might be 'All' for Everyone but Read Only for Everyone on sharing so anyone on the host PC itself can modify the files but remote users can only read them.
I don't think Sharing can override Security, so if you have read only for Everyone on security but All on sharing you'd still only get read only access remotely.
That's my understanding of it, anyway.