A "User group" is a group to which you can assign users to make managing permissions easier.

Only 'Admin users' or 'Users' with appropriate permissions can manage user groups.

As an example, you might create a 'Managers' user group and assign all your managers to that group. You can then enable permissions for the group and all the managers will receive the same permissions.

Without creating a user group you would have had to edit the permissions for each of the managers one by one. Additionally, should you later want to amend the permissions for all managers, with user groups you can do this in one place instead of having to updated each manager.