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It's a feature that I haven't really played with, but according to the documentation, if we had let say a private forum or had a very large board requiring 10+ moderators, then I could group them and managed them a single entity rather than individually.
In the administration panel, there is an option to create group and assign a moderator to the group. The group moderator can then decide who to let in and managing the group accordingly.
Since the board doesn't have hordes of moderators and that we do not have active private forums, the incentives to use groups isn't very high right now. So I can't tell you more on how they work... I didn't really tried using them yet.
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