Hi,
Sentry service stores policy information in a relational database, whereas the Policy File implementation uses a file. You should never use both at the same time as that would be redundant. When using Sentry service, you issue grants and revokes via the HiveServer2 client beeline.
The descriptions for the Sentry configuration in the CM UI have links to documentation explaining the usage, which should answer all of your questions.
Thanks,
Darren