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Generally, a group is a container for server profiles and other groups, but it can also include a few other application elements. Groups are used to organize profiles and other elements in a hierarchical structure, just as you use folders to organize files on your file system. Drawing an analogy, the top level group plays the same role as drive C:\ on your file system.
For example, if you have a lot of profiles referring to your local servers, you can make a new group with name Local Servers to contain all those profiles.
Also you can easily copy and move a group by selecting it and dragging to a new location.