The event API is newer than the User API. It is intended for intermediate developers who are willing to learn a little bit of the low level API structures. Its relatively simple to use, but requires a basic understanding of the parts of an Excel file (or willingness to learn). The advantage provided is that you can read an XLS with a relatively small memory footprint.
One important thing to note with the basic Event API is that it triggers events only for things actually stored within the file. With the XLS file format, it is quite common for things that have yet to be edited to simply not exist in the file. This means there may well be apparent "gaps" in the record stream, which you either need to work around, or use the Record Aware extension to the Event API.
To use this API you construct an instance of org.apache.poi.hssf.eventmodel.HSSFRequest. Register a class you create that supports the org.apache.poi.hssf.eventmodel.HSSFListener interface using the HSSFRequest.addListener(yourlistener, recordsid). The recordsid should be a static reference number (such as BOFRecord.sid) contained in the classes in org.apache.poi.hssf.record. The trick is you have to know what these records are. Alternatively you can call HSSFRequest.addListenerForAllRecords(mylistener). In order to learn about these records you can either read all of the javadoc in the org.apache.poi.hssf.record package or you can just hack up a copy of org.apache.poi.hssf.dev.EFHSSF and adapt it to your needs. TODO: better documentation on records.
Once you've registered your listeners in the HSSFRequest object you can construct an instance of org.apache.poi.poifs.filesystem.FileSystem (see POIFS howto) and pass it your XLS file inputstream. You can either pass this, along with the request you constructed, to an instance of HSSFEventFactory via the HSSFEventFactory.processWorkbookEvents(request, Filesystem) method, or you can get an instance of DocumentInputStream from Filesystem.createDocumentInputStream("Workbook") and pass it to HSSFEventFactory.processEvents(request, inputStream). Once you make this call, the listeners that you constructed receive calls to their processRecord(Record) methods with each Record they are registered to listen for until the file has been completely read.
A code excerpt from org.apache.poi.hssf.dev.EFHSSF (which is in CVS or the source distribution) is reprinted below with excessive comments: