FBX is a cross-software 3D file format for sharing models, animations, and textures, while an Unreal 3D model is an asset optimized specifically for Unreal Engine—often using FBX as a base.
FBX focuses on interoperability: you can export a model from Blender as FBX to use in Maya or Unity, preserving core data.
Unreal models add engine-specific tweaks: level of detail (LOD) settings, Unreal-compatible materials, or .uasset files that ensure seamless real-time performance.
To use a model in Unreal, start with an FBX export from your 3D tool, then optimize it in the engine (e.g., adding LODs) to turn it into a fully functional Unreal 3D model.