How do I create grouping and add groups in Moodle?

What is a grouping?
A grouping is a collection of groups within a module. Using groupings allows you to direct tasks to one or more groups so that they can work together on the tasks.
To assign a specific activity to a grouping, you must first set up the grouping. 

Quick answer
This can be done from the “Participants” page

Full answer

1. From your Moodle site, click on the “More” link under the module banner, and select “Participants”.

   

2. Next, click on the "Enrolled user" dropdown and select "Grouping" from the list.

   

3. On the Groupings page, click the “Create grouping” button.

   
   

5. On the Grouping page:
   1. Enter a Grouping name.
   2. Specify a Grouping description (if required).
   3. Click “Save changes”.
      
      
6. On the Groups page
   Click on the "Show groups in grouping" icon as shown in the screenshot below

   

7. On the Grouping page - Click “Add/remove groups.
   Here is where you add groups to the grouping.
   Move groups from the Potentials members section to the Existing members section

   

8. When you are done, these grouping will be available to add to activities in your module.