I'm trying to understand the difference between sequences and lists.
In F# there is a clear distinction between the two. However in C# I have seen programmers refer to IEnumerable collections as a sequence. Is what makes IEnumerable a sequence the fact that it returns an object to iterate through the collection?
Perhaps the real distinction is purely found in functional languages?
Not really - you tend to have random access to a list, as well as being able to get its count quickly etc. Admittedly linked lists don't have the random access nature... but then they don't implement IList<T>. There's a grey area between the facilities provided by a particular platform and the general concepts.
Sequences (as represented by IEnumerable<T>) are read-only, forward-only, one item at a time, and potentially infinite. Of course any one implementation of a sequence may also be a list (e.g. List<T>) but when you're treating it as a sequence, you can basically iterate over it (repeatedly) and that's it.