Yes, setting the number of assigned licences to 0 will remove them all, however it will not allow you to reduce it to 0 without first removing the assignments. So, short answer is, both!
On the Document CALs tab under the dashboard you want to remove
1) Remove assignments (you might need to wait for 24 hour quarantine period if they have used it recently).
2) Reduce assigned CALs to 0
3) Click Apply