No, 1 session will not handle 2 different users, it is a 1 to 1 relationship. Here is what is gong to happen by placing your code in the Session_OnStart:
A user will come to your site, and a session is created for them, thus calling your code to increment your code.
Now, if a user is idle at your site for 15 minutes (This is the default timeout for sessions but you can change it), their session will timeout and die; when they make another request to the server AFTER their session has expired, a new session will be created and will call your code in the Session_OnStart event.
So, as you can see, you code is going to really increment how many sessions you application serves and not necessarily how many users have come to your site. (In the above example, the user has incremented the counter twice but only visited your site once.)
By Session Lifecycle I think you mean to say Page Life Cycle and you can read about that here:
http://msdn2.microsoft.com/en-us/library/ms178472.aspx
A session's life is present as long as the user continues to do *something* and does not become idle for a period of time that exceeds the session time out.
Application_Start fires only 1 time every time the application is started. What I mean by this is that if you bounce your WebServer and restart it, Application_Start will fire once a resource has been requested from your application and will not fire again until the application is stopped through IIS or the server is restarted as a whole.
Session_OnStart will fire every time a new user requests resources from your application.
hth.
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