The "Groups" menu can be found by navigating to Leads & Contacts -> Groups.

Create a New Group - Click the "+ Create" in the top-left corner.  Add a name and description.  A group with only a name and/or description will be a manual group.  You can freely add and remove contacts to/from this group.

Create a Smart Group - When creating a group, after adding a name and description you can use the "smart group" filters.  These let you set a filter for a group that will automatically add or remove contacts from the group.  You can set a filter for creation date, "valid email address," loan statuses, etc.

Editing or Deleting a Group - Click the selection checkbox next to the group you want to edit/delete, then click the edit or delete button that appears in the top-left corner after selecting a group.  Note: If there is no check mark under the "editable" column for a group, this means that the specific group can't be edited or deleted.  This is usually because group was created from loan data coming into your account from your LOS.