A nice overview can be found in the Moodle documents.

There are three group modes

• No groups – There are no sub groups, everyone is part of one big community
• Separate groups – Each group can only see their own group, others are invisible.
• Visible groups – Each group works in their own group, but can also see other groups. (The other groups’ work is read-only.)

You can arrange groups at the Home level.

1. Go to the Home page.
2. Click on Site administration
3. Click courses
4. Click on course default settings
5. Indicate your wishes in the items Group mode and Force

You can arrange groups in a course:

1. Open the course.
2. Click settings.
3. Indicate you want to work with groups and also which type (visible or separate).

Then create a group:

1. Click the ‘Create group’ button in Administration> Course administration > Users > Groups
2. Add a group name and optional description (displayed above the list of group members on the participants page), enrolment key and picture (displayed on the participants page and next to forum posts)
3. Click the ‘Save changes’ button
4. Select the group to which you want to add participants, then click the ‘Add/remove users button
5. In the “Potential members” list, select the users you want to add to the group. Multiple users may be selected using the Crtl key.
6. Click the Add button to add the users to the group

In the Moodle documents more information is given how to handle groups and users.