Office 365 Groups are only available with Sharepoint Online, and serve as a collaboration tool.
From a management perspective, you can think of an Office 365 Group like an Active Directory. It is a feature that allows you to control access (through assigning roles and allowing/denying access requests from non-group users) to other services like SharePoint sites, Teams, Planner, and so on.
You can learn more about Office 365 Groups on the Microsoft help center.
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