Groups are customers that match rules, kept up to date by themselves: for example Regulars (placed at least 3 orders) or people who have ordered, but not for 90 days.
Create them in Customers › Groups with New group. Rules include number of orders, amount spent, last order, having an account, being subscribed to your emails, and tags.
Use a group to limit a discount to it (Marketing › Discounts) or to send an email to it.