Contact groups allow you to see contacts in their respective context. This greatly increases the usefulness of the address book.
Contacts can be members in any number of groups. For example, Walter is a neighbour, at the same time he is also in the bowling club, in the community and in the choir.
If I look at the group choir with the contact group app, I see all the choir members clearly with a photo in a list, in the community group all members of the community etc.
To send an e-mail to all bowling club members, just indicate bowling club as the recipient.