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Project groups are used to categorize projects. Assigning projects to groups lets you sort and filter them to only show the ones that matter to you. How you group projects and how you name them will vary. Some organizations do it by year, some by type, some by the subset of the organization which is responsible for the project. When you've created one or more project groups, the Projects panel will show a filter checklist at the top which lets you see only those projects in the group(s) you specify.
Define project groups from the Setup panel using the Project groups link. Add a new project group with the Add project group link, or edit and delete existing items by right-clicking on them.
Deleting a project group removes that project group from all projects assigned to it. This does not delete the projects themselves.