There are two general approaches you can take to creating a target audience: broad and specific.
Specific targeting takes in the form of demographic targeting, custom audience and lookalike audiences. This might lead your potential audience to be smaller, but you will more likely reach people who are more interested to your product or people you care most about.
Whereas for broad targeting, you will mostly rely on Facebook's delivery system to find the best people to show your ad to. With broad audience targeting, you will be able to reach people who've expressed interest to products similar to yours, cart abandoners, as well as people who haven't visited your website or app yet. This is an approach to take if you would like to come across potential customers you never would've known about otherwise.