Pet grouping is either done manually by the user or automatically through the coding (which may be based on species, sex, level, etc). When done by the user, as it is often preferred, it allows the user to create a new "Adopt Group" from their "Myadopts" page. They should be able to name the group, and decide what the trade settings are for it (commonly allows other users to make trade offers on pets in that group, or not, and some sites make it so you can create a group that only you- and no other users- can see).
After the new group(s) are created users can then select the pets they'd like to move, then move them to the chosen group. They can also, once going to their page, choose which group they see.
Essentially it's a way to organize pets.
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