This is an advanced topic. You should be familiar with Moodle and setting up courses before you try the following.
An instructor can organize users into Groups across an entire course and within particular activities of a course.
Creating groups allows you to organize students for more efficient administration. You can filter activities and gradebook so you only see one group at a time. For a group project you can have them submit a single project and grade all the students in the group at the same time. You can use groups to restrict access to certain activities or resources, or set up extensions for specific groups (ie DRC Accommodation). With discussion forums you can use groups to allow you to restrict interaction between students.